Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — TRANSPORT

Horse and Pony Riding Accidents

Mr. Greenway: asked the Secretary of State for Transport if he will give details of the method of collecting statistics of people involved in horse and pony riding accidents.

The Minister of State, Department of Transport (Mrs. Lynda Chalker): Vehicles in injury accident reports are divided into 15 groups, one of which is "Non-motor vehicles" which includes ridden horses but excludes cycles. There were, in 1983, 341 casualties among the non-motor vehicle user group, most of whom would have been horse riders. However accidents involving horses, especially those involving no other vehicles, are frequently under-reported.

Mr. Greenway: Is my hon. Friend satisfied that those statistics reflect the true number of accidents to horses and riders, since they are not specifically included? Has not the time come for fluorescent bands and lights to be compulsory for riders after dusk? Should not riders always wear hard hats with a proper chin strap when riding on roads, if not everywhere else?

Mrs. Chalker: As I said, we suspect that there is under-reporting in the figures. It would be difficult to isolate exactly how many of the 341 casualties were horse riders, but we do ask all riders to report any accidents in which they are involved. I do not favour compulsion in this area, but I recommend every rider to follow the do's and don'ts in "Ride more safely", a publication of the British Horse Society, which advises that riders should always wear fluorescent and reflective belts or tabards and hard hats carrying the British Standards Institution's kite mark or the EEC E mark.

Taxi Owners

Mrs. Kellett-Bowman: asked the Secretary of State for Transport if he will introduce legislation to provide compensation to taxi owners who have paid for their licence plate, the value of which will be reduced to zero when deregulation takes place.

The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): We have no plans to do so.

Mrs. Kellett-Bowman: Will my hon. Friend accept that I find it disappointing that he cannot help this hard-working bunch of people, many of whom have spent their redundancy money on their licence plates or are looking forward to selling these plates to finance their retirement? If he cannot help in the way that I have asked, will he at least see that taxi drivers are not driven out of business by fly-by-night operators who just skim the cream at weekends and have other sources of income?

Mr. Mitchell: The problem has been caused by local authorities restricting the supply of taxi plates. I want to listen to the operators' views at first hand and discuss the problems with local government representatives.

Mr. Merlyn Rees: Is the Minister aware that I met a group of those involved in the taxi trade in the wider Leeds areas at the weekend? In view of the finality of his answer, what sort of time scale have we for making representation on the wider issues of deregulation?

Mr. Mitchell: Naturally, I was not aware that the right hon. Gentleman had met the taxi operators to whom he referred. It is my intention to meet representatives of the taxi operators' profession. I shall be happy to include any whom the right hon. Gentleman wishes to introduce.

Mr. Waller: Will my hon. Friend bear in mind that it is no fault of the operators that the local authorities have restricted the issue of plates and have therefore made it necessary for operators to pay thousands of pounds in many cases in order to acquire one? Should not my hon. Friend bear that very much in mind when going ahead with deregulation of the taxi business?

Mr. Mitchell: Yes, Mr. Speaker. That is one reason why I intend to discuss the matter with the local authority representatives.

Mrs. Dunwoody: What efforts has the hon. Gentleman made to consult old-age pensioners and those enjoying concessionary bus fares who may find themselves without transport and who will find that the taxis that are left are much more expensive than anything they have at present? What compensation will they receive?

Mr. Mitchell: I have every reason to believe that our proposals on buses will lead to more competition, more plentiful supply and lower fares.

Roads (Expenditure)

Mr. Blair: asked the Secretary of State for Transport by how much spending on motorways and trunk roads has increased in real terms since 1979.

The Secretary of State for Transport (Mr. Nicholas Ridley): At 1982–83 average prices, estimated expenditure for 1983–84 exceeded that for 1979–80 in real terms by just over 20 per cent., rising from £574 million to £689 million.

Mr. Blair: Does the right hon. Gentleman accept that there is an alarming disparity between the capital spending on roads by his Department and the capital spending by local authorities? Does he not understand that the way forward is not to inhibit revenue spending by local authorities on vital public transport, but to increase capital allocations so that local authorities, including my own in County Durham, can provide the road links that are vital to attracting and keeping new employment?

Mr. Ridley: The hon. Gentleman is right in suggesting that many authorities have taken money from the allocations for local roads to spend on revenue subsidies. It is partly to encourage them to spend more on roads that we are moving to a capital-only transport supplementary grant. I hope that that will inhibit them from transferring as much as they have in the past.

Mr. Beaumont-Dark: Is my right hon. Friend aware that many of us are delighted to hear the encouraging figures about expenditure on motorways since 1979, because it makes the motorways so much safer? However, will my right hon. Friend at long last give proper consideration to increasing the speed limit on motorways from the antiquated 70 mph to the 80 mph, which would be so much more appropriate?

Mr. Ridley: My hon. Friend is extremely ingenious, but I hope that he does not treat the speed limits in the same evasive way as he treats questions on the Order Paper. The Government have considered the speed limit on motorways and we came to the decision that I have announced. We do not intend to reconsider it at the present time.

Mr. Chapman: Will my right hon. Friend confirm that the Department is still on course for completing the M25 round London by the autumn of 1986?

Mr. Ridley: That is completely correct. I repeat that that is our present expectation.

Mr. Snape: What authority does the Secretary of State have to instruct local authorities on how this money should be spent? Is it not more properly a local decision whether money is spent on public transport or road building? Why does the Secretary of State have this sudden passion for building roads in towns?

Mr. Ridley: The hon. Gentleman knows that I have no authority, and that is the answer to the question of the hon. Member for Sedgefield (Mr. Blair). Perhaps I should introduce the two hon. Gentlemen to each other, because the hon. Member for Sedgefield suggested that local authorities should spend more. I agree, but they can do that only if they stop transferring the money provided for one purpose to spend on another. It is to encourage them to concentrate on road spending that we are moving to a capital-only TSG. In view of what the hon. Member for West Bromwich, East (Mr. Snape) has said, I imagine that he will support that move.

South Yorkshire

Mr. Barron: asked the Secretary of State for Transport what is the likely effect on transport in south Yorkshire if the Government's abolition plans for the South Yorkshire county council are enacted.

Mr. Ridley: The removal of an unnecessary and extravagant tier of local government in the metropolitan counties will ensure that transport services are provided more efficiently and economically.

Mr. Barron: Will the Secretary of State elaborate on that reply? The South Yorkshire passenger transport executive will still exist after the abolition of the county council, but it will be one of the quangos which the Conservatives promised to get rid of if they were returned to office. How will the transport supplementary grant

affect south Yorkshire? Will we be able to keep the shining example of public transport that we have had in the area for the past 10 years?

Mr. Ridley: The hon. Gentleman may live to regret calling the councillors elected for districts in south Yorkshire a quango; they will be elected councillors from the districts.
I agree with the last Labour Government, who made it clear that they thought that fares in south Yorkshire were absurdly low. Until a small rise last year, fares had not been increased since 1975 and the cost of that policy to ratepayers in the area is simply insupportable. The twin changes that we are making will lead to better and more efficient transport in south Yorkshire and, I hope, a relief of the burden on ratepayers.

Mr. Gregory: Does my right hon. Friend agree that by moving in this direction the "absurdly low" level imposed in south Yorkshire—I think that reference was made to about 8p per average fare—will mean an equitable solution for all those who contribute to rates? In the people's republic of south Yorkshire, a minority at present benefit at the expense of the majority—the business and commercial ratepayers.

Mr. Ridley: My hon. Friend is absolutely right. When I say that the cost of subsidising public transport in south Yorkshire in the current year looks like being £59 million, the House will realise the enormity of what is happening there.

A19 (Repairs)

Mr. Dormand: asked the Secretary of State for Transport if he will make a statement on the results of the three investigations made into repairs of the A19 road.

Mrs. Chalker: In 1980 G. Maunsell and Partners was commissioned to investigate problems on the Tees viaduct. In 1981 and 1983 Cleveland county council was asked to examine stage I and stage II of the carriageway pavement.
Certain faults were found in the viaduct and the stage II carriageway. Careful analysis of the reports has caused the Department, as a dissatisfied customer, to begin negotiations with the consultants and contractors to seek redress. Until discussions are complete, I regret that I cannot give the hon. Gentleman final information.

Mr. Dormand: Is the Minister aware that it is three years since I asked for an investigation to take place into repairs on the A19 and that the Government refused my request? As there have now been three investigations into the allegations that I made, does that not suggest that the £7 million that has been spent on repairs to the road during a life of only nine years should be a matter of considerable concern? Despite what the Minister said, as the Government received the report on the last investigation as long ago as May 1984, when may we expect a comprehensive statement? Will she give an assurance that the contents of the three reports will be made public?

Mrs. Chalker: I think that the hon. Gentleman has asked five questions. He will be as aware as I am that it has taken a long time for the county council and the consultants to get to the bottom of the problem. There were three different inquiries, not into the same problem, but into three separate aspects to it. The stage I viaduct is


perfectly safe to use, but it must be repaired. Further repairs must also be made to the stage II carriageway. The only works that have been carried out so far involved £100,000 being spent on patching the defects.
The hon. Gentleman is not quite correct to talk about £7 million being spent over the past nine years. That amount of money has been spent over the 18⅔miles of the A19 between the river Tyne and the Yorkshire border. It includes all repairs, and for that distance of road it is not exceptional. As soon as I am satisfied with a further deflectograph study on the stage II carriageway — I cannot say that I am satisfied with the results at present—I shall consider making a statement direct to the hon. Gentleman. Until negotiations with the parties are complete I shall not publish the report, as I do not want to prejudice the outcome.

Mr. Holt: Does my hon. Friend agree that although repairs to the A19 are valuable, at whatever cost, hon. Members who live in the area will find that their constituents will continue to complain unless the junction at Dishforth is improved? When I have asked what plans the Department has for uprating the A1 to motorway standards—

Mr. Speaker: Order. Is this on the A19?

Mr. Holt: Oh yes—

Mr. Speaker: Oh.

Mr. Holt: I am very sorry, Mr. Speaker, that your knowledge does not extend to the fact that the A1 and Al9 join each other at the Dishforth roundabout. At present drivers may have to wait up to two hours to get past that roundabout. What plans does the Department have to extend the motorway provision so that the A1 is uprated at Dishforth where it leads on to the A19, and so that the latter can be uprated, thus giving the north-east of England a fillip?

Mrs. Chalker: I assure my hon. Friend that I am well aware of the problem at the Dishforth roundabout. As soon as our investigations are complete I shall write to him in greater detail.

Departmental Costs

Mr. Thurnham: asked the Secretary of State for Transport what further action he is taking to control the total running costs of his Department.

Mr. Ridley: I have established an annual review of objectives and costs for my Department and am continuing to develop its management accounting systems.

Mr. Thurnham: Is my right hon. Friend taking every opportunity to privatise operations controlled by his Department?

Mr. Ridley: Yes, Sir. Already, in concert with my right hon. Friend the Secretary of State for the Environment, we have contracted out cleaning, catering and ancillary offices services. In addition, we have contracted out to the Post Office relicensing work for motor car licences. We shall look for every future opportunity to involve the private sector when that brings financial benefit to the public purse.

A564 (Blythe Bridge—Uttoxeter)

Mr. Knox: asked the Secretary of State for Transport whether he is satisfied with the progress on the construction of the Blythe bridge to Uttoxeter section of the A564 Stoke to Derby link.

Mrs. Chalker: Yes, Sir. The main work of constructing this road started in January last year as planned and is now nearing completion. It should be open to traffic very early next year.

Mr. Knox: Is my hon. Friend aware that my constituents in Draycott, Tean and Checkley will be pleased to hear that answer? Can she say when the whole of the Stoke-Derby link road will be open?

Mrs. Chalker: I am pleased that the constituents in Draycott, Tean and Checkley will gain a significant benefit. Until the Staffordshire county council is able to come back to me after the revised figures for the other roads in Staffordshire are worked out I cannot give the final story as to when the road will be completed. It is too early. Some aspects of the scheme are not due until 1985 or 1987. The Doverridge bypass and other schemes are in the programme for 1987 onwards.

Singapore International Airways

Mr. Sackville: asked the Secretary of State for Transport what factors he took into account be fore refusing to allow Singapore International Airways to operate out of Manchester airport.

The Parliamentary Under-Secretary of State for Transport (Mr. Michael Spicer): We should welcome a Singapore Airlines service to Manchester if SIA reduced the number of its London services so that its total frequency to the United Kingdom did not increase.

Mr. Sackville: In view of the recent agreement to allow KLM unlimited sixth freedom, on onward journey, rights operating out of Heathrow through Amsterdam, will the Minister help regional airports and the north-west by allowing Singapore International Airlines equal freedom to operate from Manchester?

Mr. Spicer: We have an agreement with the Singapore authorities under which we enable demand to be met by the frequency of services. We think that the two current daily 747 flights between Singapore and Britain mounted by British Airways and SIA are sufficient. There is no question of our discriminating against Manchester, the development of which we fully support.

Mr. Alfred Morris: Is the Minister aware that his remarks will cause disappointment and resentment in the north-west? On the related question of helping Manchester international airport to achieve its full potential, will the Minister take the opportunity presented by the imposition of the movement limit at Heathrow to secure the maximum possible transfer of services to Manchester consistent with the true origins of passengers?

Mr. Spicer: The Government fully support the development of Manchester airport, which is progressing extremely effectively. It has doubled passenger throughput in the past 10 years. The Government are doing everything that they can, through the allocation of capital, to encourage that development to its full potential to meet demand.

Mr. Burt: Will the Minister explain what consideration is taken of airport growth in the granting of licences for international schedules and charter flights? Will he explain the apparent difference of approach between the development of services at Gatwick and at Manchester?

Mr. Spicer: It is a question of demand. As the hon. Gentleman knows, 80 per cent. of all traffic that comes into London airports originates and terminates in the south-east. We cannot help that. What we have done is to ensure that Manchester is able to meet the demand. We are confident that it will do so.

Mr. Snape: Is the Minister aware that the decision will be seen as another example of the Government's bias against the north of England? Why are market forces regarded as being sufficient when dealing with buses, but that ministerial dabbling is called for when airlines are involved? Will the Minister consider taking his right hon. Friend on a tour of the country to persuade him that there really is life north of Watford?

Mr. Spicer: The hon. Gentleman cannot have heard what I said. We do everything that we can to encourage the development of Manchester airport, including over the last four years allocating £20 million and, in the last week, an extra £2 million, for further development.

Transport Supplementary Grant

Mr. Bidwell: asked the Secretary of State for Transport what consultations he has had with local authorities concerning the decision to end the use of the transport supplementary grant for revenue purposes.

Mr. Ridley: On 6 July the Department wrote to the GLC and the associations representing the English local authorities setting out the proposals. I met representatives of the associations on 30 July to discuss the proposals. The proposals were also discussed at meetings on 20 and 26 July. A meeting in September of the grants working group, under the auspices of the Consultative Council for Local Government Finance, considered exemplifications of the RSG block grant consequences of the proposed changes.

Mr. Bidwell: Does the right hon. Gentleman not understand that any substantial reduction in grant assistance for local authorities will inevitably lead to higher bus fares or a reduction in services? Is he not aware that the public will not stand for that and that they will see through the Government's inept transport policy?

Mr. Ridley: Does the hon. Gentleman not understand that, overall, that which is not paid through capital only transport supplementary grant will be paid through block grant? The decision is purely one of the mechanics of paying the money, not one of the total.

Mr. Fry: Does my right hon. Friend accept that many of those in transport circles welcome his decision? Will he answer one question arising from the abolition of the metropolitan county councils? How will he ensure that successor district councils in south Yorkshire do not follow the current profligate policies of the county council in transport matters?

Mr. Ridley: South Yorkshire will have a joint board to handle transport matters, which will be subject to some form of control on the rate precepts that it may charge. That will provide a satisfactory answer to the important question asked by my hon. Friend.

Mrs. Dunwoody: Since the central funding for London bus and Underground services has fallen by 37 per cent., how can the Secretary of State seriously think that local authorities can use the money that will be made available in view of the other, quite unwarranted, attacks being made upon them by the Secretary of State for the Environment through the rate support grant?

Mr. Ridley: I do not quite understand how the hon. Lady reached that figure, which I do not accept. Large economies are available in the operation of public transport simply through achieving more efficiency. That is necessary if we are to make the cost of public transport support in some parts of the country that which the ratepayers can afford to pay.

GLC Lorry Ban

Mr. Eggar: asked the Secretary of State for Transport if there is to be a public inquiry into the Greater London council lorry ban.

Mr. Ridley: I have made clear my view that for a major London-wide proposal of this magnitude a properly constituted public inquiry would provide a well established, democratic method of assessment.
I understand that the GLC transport committee will be meeting on 21 November to consider the massive response to consultation and the many hundreds of calls for a public inquiry.

Mr. Eggar: Is my right hon. Friend aware of the very widespread opposition to the proposal, not least because it will lead directly to the loss of jobs? Is he further aware that the Wood inquiry clearly stated that there would be only a minimal environmental benefit from whatever lorry ban was proposed? Is it not essential that a public inquiry is held?

Mr. Ridley: I have made it clear on every possible occasion that a proposal of such importance requires a public inquiry. The decision will not be brought before the House, so I would have thought that all hon. Members, from both sides of the House, would want it to be subjected to impartial assessment by an inspector. Indeed, I submit all my road proposals, even for London, to that procedure if required.
I hope that hon. Members in all quarters of the House who are interested in preserving jobs in the capital city will urge that course on the GLC.

Sir John Wells: Is my right hon. Friend aware of the great anxiety about the GLC decision among all sectors of the horticultural and other wholesale markets and those supplying the capital city with fresh fruit daily? If this absurd ban takes place, will not the whole price structure and freshness of our food suffer? Will not jobs be lost? Without some form of public inquiry, and even some further and quicker control over that already anticipated for the GLC, we shall all suffer gravely.

Mr. Ridley: I have every sympathy with my hon. Friend's remarks. When we consider that about 7 million have to be fed by deliveries overnight of fresh foods, we realise the immense implications of what is proposed. I do not think that anyone could avoid feeling that the costs as well as the benefits of the proposal should be carefully assessed before it is proceeded with.

Mr. Stott: If the Secretary of State is so keen to have the democratic assessment of the people of London of the


proposed ban, why did he not ask for a democratic assessment before he removed the GLC's powers to run its own transportation system? Why cannot he persuade his right hon. Friend the Secretary of State for the Environment to invite the democratic assessment of the people of London of his proposal to remove the GLC?

Mr. Ridley: For action of a political nature of that sort the Conservative party took the precaution of seeking the views of the 54 million who reside in this country by presenting its proposals to the electorate in a general election, which nearly skittled the hon. Gentleman's party off the ground. When it comes to administrative matters on which the House is not called upon to give an opinion, I would think that he, with his tenuous hold on democracy, might agree with me. Having said that—

Mr. Stott: I have a 17,000 majority at Wigan.

Mr. Ridley: —I welcome the hon. Gentleman's return to the transport portfolio. We shall have plenty for him to learn in the months ahead.

Domestic Air Services

Mr. Sayeed: asked the Secretary of State for Transport what measures he intends to take to increase competition in domestic air services.

Mr. Ridley: The Civil Aviation Authority proposes to introduce on an experimental basis an area licensing facility allowing airlines to serve any domestic route, other than certain excluded routes, and to cease regulating domestic fares. It will shortly publish formal proposals, on which interested parties can then comment. The Government have welcomed the authority's intention of liberalising domestic services.

Mr. Sayeed: I welcome my right hon. Friend's answer. However, does he agree that his policy will be ineffective unless provincial and regional airports are allowed freely and fairly to compete with one another? Will he ensure that Cardiff, for instance, is not allowed to poach work by being given an unfair advantage over Bristol airport?

Mr. Ridley: I am grateful to my hon. Friend for his general welcome of the policy, which I am sure is the right one for generating more air travel and cheap air fares. There are no subsidies from the Department of Trade and Industry or from any other central Government source that are made available either to Cardiff airport or Bristol airport. It may be that they are entitled to European regional development fund assistance, but I understand that Cardiff has not made an application for such help. If my hon. Friend has any details of unfairness, perhaps he will let me know and I shall investigate them.

Mrs. Clwyd: Will the Secretary of State confirm that Cardiff airport was designated as the regional airport for Wales and the west of England in the White Paper on air transport?

Mr. Ridley: I am sure that that is correct and I wish it all success. However, designation is not quite the same as subsidisation.

Lord James Douglas-Hamilton: Is my right hon. Friend aware that there is strong demand for more intercontinental flights to Edinburgh and that, at the same time, there will be strong opposition to flights operating throughout the night?

Mr. Ridley: I am grateful to my hon. Friend for making me aware of those two important facts. They can hardly arise from the context of Cardiff and Bristol airports.

Bus Deregulation

Mr. Haynes: asked the Secretary of State for Transport what conclusions he has drawn on the efficiency of bus deregulation following his Department's experiments in trial areas.

Mr. Ridley: Experience in the trial areas has confounded the prophets of doom and shown that in a rural area deregulation and tendering for uneconomic services produces large savings of subsidy, and lower fares, without loss of services or safety.

Mr. Haynes: Is the Secretary of State aware that the policy set out in his White Paper and the proposed Bill will be a complete failure? His Department carried out an exercise, looking at certain transport services, and found that many of them were not up to standard, and most were well below. Will the Secretary of State drop his plans and leave everything as it is, so that the people can have the decent transport services to which they are entitled?

Mr. Ridley: On the contrary, in Hereford and Worcester the cost of subsidies in the trial area fell by £62,000, or 38 per cent., and the cost of school transport fell by £65,000 per annum. Fares in Hereford town went down and the number of services increased by 78 per cent. Under the impetus of this competition, the Midland Red—a subsidiary of the National Bus Company—was able to increase its productivity by between 25 and 30 per cent. Surely even the hon. Gentleman welcomes such wonderful results and would like to see them applied to his constituency, where they would be of great benefit to his constituents, despite his rather grudging acquiesence.

Mr. Adley: We all welcome any evidence that changes that have been made in whatever sector have produced benefits. Does my right hon. Friend agree on the following two simple points: first, that an adequate public transport system is the benchmark of a civilised society; and, secondly, that the elimination of cross-subsidy in public transport is likely to mean fewer off-peak services and fewer weekend services?

Mr. Ridley: There is everything to be said for having an adequate public transport system, but there is even more to be said for having one that operates at minimum cost to those who have to subsidise it. Secondly, cross-subsidy is a strange form of redistribution, because it happens mainly from the industrial north to the south of England and from the centre of cities to the country districts, and from the poorer areas to the leafier subsidies—

Mr. Snape: That is what the right hon. Gentleman represents.

Mr. Ridley: The right way to use ratepayers' and taxpayers' money is to provide socially desirable services rather than to subsidise the bus industry as a whole.

Mr. Foster: Is the Secretary of State aware that no one in rural areas believes what he says—not the county councils, the district councils, the passengers or the bus


operators? Is he further aware that they resent his taking risks with their services for reasons of narrow party political dogma?

Mr. Ridley: I know that the hon. Gentleman has been got at by operators, local authorities and unions, but he might take care to consult the passengers. It is they who will benefit from this policy, and they want it. If the hon. Gentleman goes to Hereford or Worcester he will find that the passengers there would be loth ever to see the policy ending, because it has brought them such enormous benefits. I make it clear that the Government's transport policy is not about unions, operators and councils, but is about those who go on transport, and it is those whom we wish to benefit.

Mr. Bermingham: On a point of order, Mr. Speaker.

Mr. Speaker: I shall take points of order after questions.

Later—

Mr. Speaker: May I say to the hon. Member for St. Helens, South (Mr. Bermingham) that I hope his point of order is not an attempt to prolong Question Time. Unhappily, I was not able to get him in.

Mr. Gerald Bermingham: My point of order arises out of the answer given to my hon. Friend the Member for Bishop Auckland (Mr. Foster). I took a note of what the Minister said. He said that my hon. Friend had been got at by certain interests such as unions and district councils. I take exception to the phrase "been got at". It implies that my hon. Friend has been subject to undue influence and that he has succumbed to it. Such language is not parliamentary and it did not arise in the heat of debate. It implies that hon. Members are not allowed to put to the House information that has been given to them by third parties. I am merely asking that the Minister be asked to withdraw the expression.

Mr. Speaker: I do not think that the expression is unparliamentary. I do think that we must be careful about our language, but surely this place is about pressures.

Airline Seats

Mr. Michael Morris: asked the Secretary of State for Transport whether he will allow airlines to sell as many seats as they wish within the prescribed flight frequencies.

Mr. Michael Spicer: Generally they are already free to do so. As my hon. Friend knows, however, there are one or two isolated instances where sales of tickets are restricted under an arrangement between the aeronautical authorities, which allows the foreign airline to operate more services each week than would normally be justified under the agreement.

Mr. Morris: Is my hon. Friend aware of the problem facing Air Lanka, which is that when it flew TriStars on the London-Colombo route it was allowed to sell 830 seats, but now that it has improved services to the public by offering the Boeing 747 it has been restricted to just 690? Is that competition and giving a better service to the public?

Mr. Spicer: The only agreement with the Sri Lankan authorities, even predating the 747 flights, restricted the number of seats to 690, out of which 240 per week only are taken up by passengers travelling between London and Colombo.
We think that many sixth freedom passengers have been picked up at Singapore. That may be the reason why the Singapore authorities have given notice to terminate their agreement with Sri Lanka.

Bus Deregulation

Dr. Marek: asked the Secretary of State for Transport what assessment he has made of the quality of stage carriage bus services in the United Kingdom if his plans for deregulation are implemented.

Mr. David Mitchell: The recent White Paper on buses set out the Government's reasons for seeking to remove the present system of road service licensing and their assessment of the beneficial effects that that will have on the quality of local bus services.

Dr. Marek: Bearing in mind the Secretary of State's answer to Question No. 15, will the Minister explain why, in their proposals in Cmnd. 9300, the Government recommend a large temporary grant for bus operators in rural areas?

Mr. Mitchell: Precisely because we want to be absolutely sure that they do not suffer any deterioration in the level of service they receive.

Oral Answers to Questions — ATTORNEY-GENERAL

Director of Public Prosecutions

Mr. Skinner: asked the Attorney-General what recent discussions he has had with the Director of Public Prosecutions regarding civil and criminal legal matters; and if he will make a statement.

The Attorney-General (Sir Michael Havers): I meet the director regularly to discuss matters concerning his Department as well as particular cases which it is handling. He has no responsibility for civil matters and I do not discuss them with him.

Mr. Skinner: Is it not high time that the DPP took some action against people in the City who in the recent past have been guilty of fraud? Is the Attorney-General aware that Johnson Matthey was insolvent in the summer, yet no action was taken—despite the fact that it continued to trade—with the result that the taxpayer, through the Bank of England, has now been called on to bail that company out to the tune of up to £75 million? Does that not compare strangely with the fact that old ladies can be sent to gaol or summonsed for taking a tin of salmon or that miners can be fined for taking coal so that pensioners can be kept warm? Is there one law for the workers and another for the City? Why should people in the City get off scot-free?

The Attorney-General: There is at present no evidence before the DPP of any fraud or misconduct on the part of the company to which the hon. Gentleman referred. It is wrong to say that the DPP has not intervened in allegations of City fraud. In the case of Howden he has already set up a police inquiry, and in the case of PCW and Minet, police inquiries are still continuing.

Mr. Stanbrook: Has my right hon. and learned Friend discussed with the DPP the disclosures in The Sunday Times yesterday concerning a certain notorious fugitive criminal in the Republic of Ireland? In that case would it


not have been appropriate to use the provisional warrant procedure rather than go through the endorsed warrant system?

The Attorney-General: Unfortunately, the system under which one seeks the return of someone whom one wishes to try for a criminal offence here is laid down in a number of Acts of Parliament. That procedure was properly followed in this case. The original documents were not completely in order, and the police had to obtain documents which met the case. Unfortunately, because the information was published ahead of time, it appears that the person concerned could not be found.

Mr. John Morris: Is the Attorney-General satisfied that the extradition procedures agreed between this country and the Irish Government are working properly? In particular, will he confirm that he knows of no basis for complaint with regard to the failure to execute the warrant issued in relation to Miss Evelyn Glenholmes?

The Attorney-General: The right hon. and learned Gentleman is perfectly right and I am grateful to him. The proper procedure was followed. The doubts expressed by the Garda were the right doubts about mistakes. The matter was brought back, put right and taken over. The Garda have behaved impeccably, not only in this case, but in others in which we have sought their assistance.

Contempt of Court Act

Mr. Bell: asked the Attorney-General what further legislation he will bring in further to consolidate the Contempt of Court Act.

The Attorney-General: None, Sir.

Mr. Bell: Does the right hon. and learned Gentleman not feel that it is fitting to bring in legislation to prevent the Attorney-General from going on Radio 4 and discanting on possible sentences for contempt of court by Mr. Arthur Scargill, or telling the nation why he proposes to prosecute a senior civil servant for disclosing matters
which I say he had no right to disclose"?
Is this not a case of "Physician, heal thyself."?

The Attorney-General: I had hoped that the hon. Gentleman, who wrote to me on that topic, would at least have taken the trouble to obtain the transcript of both occasions. The occasion involving Mr. Arthur Scargill was one when I was asked to explain, contrary to what Mr. Scargill had been maintaining, that this was a case, brought by two Yorkshire miners arising out of a breach of contract, about the rights of any member of any club, association or trade union when those in charge of that organisation are breaking the law. That is what I was asked to explain, and I did. During my explanation I made comments that came nowhere near the comments that have been made.
The hon. Gentleman also asked me about the case of Mr. Ponting. The question arose out of the publication of a book by Professor Edwards and as a result of many allegations that I had consulted my right hon. Friend the Secretary of State for Defence, which was totally untrue. I was asked why I had not consulted in this case. I said:
It didn't strike me as something which was necessary. In this particular case—and again I've got to be very careful because it's coming up—it was simply a question of a very senior civil servant who had disclosed matters which I say he had no right to disclose. But that would be a matter for the court. That is the basis of the prosecution.

That was the basis of the prosecution as published at the committal proceedings that preceded that interview.

Mr. Douglas Hogg: Does my right hon. and learned Friend accept that most of his right hon. and hon. Friends believe that all that he did in the case of Mr. Scargill was to outline the powers available to the court and emphasise that it was entirely a matter for the court? That seems in no way objectionable.

The Attorney-General: I am grateful to my hon. Friend. I was asked what the various powers were, and I answered. I was then asked in terms, "Can Mr. Scargill be sent to prison?" and I said that that was one of the powers that were open to the court, but that it would be a matter entirely for the court.

Mr. John Morris: Does the Attorney-General agree that, in commenting as he did on the Ponting case on Radio 4, he has caused difficulty, particularly to the House, because, having regard to the ruling of Mr. Speaker, I cannot ask him to confirm here what he said outside? Therefore, would it not be more prudent if the Attorney-General did not comment on cases before the courts and bore in mind the limitations that we have here in questioning him on any statement that he makes outside?

The Attorney-General: The problem is this. That was a tiny part of quite a long interview. The whole programme took half an hour. I was asked in particular by the interviewer, who is reputable and highly respected, about Professor Edwards' comments on the duties of a Law Officer. That comment was purely incidental. What we were seeking to do was to discuss whether consultation had, or should have, taken place, or why it did not take place with other Ministers. That is what it was all about.

Official Secrets Act

Mr. Winnick: asked the Attorney-General if he will make a statement on his policy on prosecuting civil servants for breaches of the Official Secrets Act.

The Attorney-General: I described the relevant considerations fully in my reply to the hon. Gentleman on 9 April this year.

Mr. Winnick: Is the Attorney-General aware of the considerable disquiet over the action that he took involving a very senior civil servant? Is he further aware that when the case of Mr. Ponting is no longer sub judice he will be expected to come to the House and make a full statement justifying the action that he took?

The Attorney-General: It would be impossible for anybody to be unaware of the considerable disquiet about my decision, since practically every newspaper and every radio and television broadcast on the subject has gone on and on about it. With the notable exception of the right hon. Member for South Down (Mr. Powell), it has all been one way. Of course the hon. Gentleman is right. Once the case has been disposed of I shall have to answer for my decision here, and I am not frightened to do it.

Sir William van Straubenzee: Having had the advantage of watching my right hon. and learned Friend at work as Solicitor-General, am I correct in understanding that in this, as in other matters, his function is to make a judicial decision entirely independent of his membership of the Government? Does he agree that that task, however


difficult it may be, has been achieved by successive holders of his office from all political parties? Is he aware that many of us are quite satisfied that that is exactly what he has done in this case?

The Attorney-General: I am grateful to my hon. Friend. That policy was laid down shortly after the war by Sir Hartley Shawcross and I believe that it has been faithfully followed by all Law Officers since. The policy is clear and simple. It is to consider each case on its merits and to consider the public interest aspect of it. Official Secrets Act cases are no different from any others.

Oral Answers to Questions — OVERSEAS DEVELOPMENT

UNESCO

Dr. Twinn: asked the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied with the outcome of the recent meeting of the United Nations Educational, Scientific and Cultural Organisation executive board.

Mr. Jessel: asked the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied with the improvement in the United Nations Educational, Scientific and Cultural Organisation since the Minister for Overseas Development wrote to the secretary general six months ago.

Mr. Hayes: asked the Secretary of State for Foreign and Commonwealth Affairs what progress has been made towards achieving reforms in the United Nations Educational, Scientific and Cultural Organisation.

Mr. Moynihan: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the Government's intentions regarding the United Kingdom's continuing membership of the United Nations Educational, Scientific and Cultural Organisation.

The Minister for Overseas Development (Mr. Timothy Raison): Some progress has been made, but much remains to be done. The executive board approved various reforms which, if properly implemented, would improve UNESCO. I am now considering with my colleagues the question of the United Kingdom's continuing membership.

Dr. Twinn: Given the growing disquiet about UNESCO, does my right hon. Friend feel that that organisation is now making sufficient progress towards producing programmes that are of real, practical benefit to member states rather than of a purely party political nature? Does he agree that if such progress does not occur the case for withdrawal will become unanswerable?

Mr. Raison: Some progress has been made with programmes, but there has not been nearly enough so far. We need to see something very solid. That is one of the important considerations in our review of UNESCO.

Mr. Jessel: Why should one more penny of British taxpayers' money go to a bloated international bureaucracy, which is incompetent and highly political, wastes a great deal of money and is hostile to the West in general and to Britain in particular? Cannot some way be found to give the money to Ethiopia instead?

Mr. Raison: We are considering very carefully the many criticisms that have been made of UNESCO. We are getting on with that. We shall come to a view and we shall inform the House of that view.

Mr. Moynihan: While I am strongly of the view that the Government should be working towards, rather than away from, the United Nations 0·7 per cent. target for aid and that any cuts in the overseas budget would cause widespread concern in the House, does my right hon. Friend agree that the criterion for UNESCO aid disbursements should be effective distribution to recipients and that conditions for improved performance should be tied to a declared intention to withdraw, to be implemented if, and only if, such improvements are not forthcoming by the end of next year?

Mr. Raison: In all our considerations of UNESCO we attach very high priority to effectiveness and we do not have very much regard for some of the words spoken under its auspices.

Mr. Johnston: Will the right hon. Gentleman confirm from his own party experience that an organisation is more easily changed from within?

Mr. Raison: In coming to a view as to whether or not it is right to give notice it is important to consider whether reform can most effectively be achieved from within. If we gave a year's notice, however, we could continue with the reform process, at any rate until our membership was terminated.

Dame Judith Hart: As UNESCO is one of the major United Nations development institutions, does the Minister agree that it is his duty not just to inform the House of any decision that he makes but to consult the House before any final decision is made? Will he undertake to do that?

Mr. Raison: Hon. Members can put their views to me as strongly as they wish. There is no difficulty about that. I should point out to the right hon. Lady, however, that UNESCO itself and its director-general like to stress that it should not be regarded simply as a development organisation.

Mr. Barnett: While we accept that the Minister is investigating the issue carefully and that there are grave reservations about the way in which UNESCO is being run, does he recognise that Britain's withdrawal, along with that of the United States, would cause grave dismay in the Third world? What assistance is he seeking from Third world countries to solve the problem?

Mr. Raison: Obviously some people would be worried if we withdrew. Others would say that to give notice of withdrawal would be an effective way of keeping up pressure.

Mr. D. E. Thomas: To what extent will the Minister take note of the decision of the national commission of UNESCO last week that it wanted the United Kingdom to remain part of the organisation?

Mr. Raison: As I presided over that meeting, I am in a good position to know what the commission said and to consider it carefully.

Mr. Tom Clarke: In addition to taking account of the views of the national commission, does the Minister recall that 25 human rights organisations took the same view?


Does he agree that we should remain a member, bearing in mind those views and the views of non-aligned nations, rather than appear to hang on to American coat tails?

Mr. Raison: I am as aware as anybody of the many opinions being expressed on the matter, which arise from two different points of view. We shall consider with the utmost care the various representations and points of view in reaching our decision.

Sir Peter Blaker: Is my right hon. Friend aware that when I led the British Government delegation to the UNESCO general conference in Belgrade a few years ago it became clear to me that the organisation was inefficient, grossly overstaffed at its Paris headquarters at the expense of it activities in the field and, contrary to the intentions of its founders, that it often indulged in political measures at the expense of the free world? Will he consider seriously the suggestion put to him by my hon. Friend the Member for Lewisham, East (Mr. Moynihan), that we should give notice of withdrawal now, thus keeping the position open at the end of next year?

Mr. Raison: My right hon. Friend has great experience in this matter. We are considering with great care his views and the views of those who think as he does.

Disaster Relief

Mr. Alan Howarth: asked the Secretary of State for Foreign and Commonwealth Affairs what plans he has for improving the international co-ordination of disaster relief.

Mr. Chapman: asked the Secretary of State for Foreign and Commonwealth Affairs what initiatives he proposes to take to encourage the setting up of an effective international task force to help people on the outbreak of famine and after other major catastrophes.

Mr. Raison: I am not convinced that a new international body is needed. It may be that in relation to a particular crisis there is a need for special co-ordination beyond the role played by the United Nations disaster relief office, supported by other United Nations' agencies. In the case of Ethiopia, my right hon. Friend the Prime Minister has been in touch with the United Nations' secretary-general about special co-ordination requirements. He recently announced the appointment of Mr. Kurt Jansson, as assistant secretary-general for emergency operations in Ethiopia.

Mr. Howarth: I note what my right hon. Friend says, and I know of his strong humanitarian concern, but does he agree that it is utterly unacceptable that, whenever a

great disaster occurs, whether it is famine, as in Ethiopia and sub-Saharan Africa now, or flood or earthquake, the fortunate nations of the world lack remotely adequate contingency plans to give help? Will the Government do everything in their power to ensure that the existing institutional arrangements are overhauled so that in future we shall have an effective international disaster relief agency, which is properly prepared to deal with crises and which has all the resources necessary to get help to the relevant areas rapidly and on an adequate scale?

Mr. Raison: I agree with my hon. Friend that we must be absolutely certain that we have the right mechanism for dealing with the disasters which the world must, sadly, face. I do not believe that a new organisation is necessarily the right answer. It is essential that we have proper plans to ensure that we can distribute aid when we are faced with such problems.

Mr. Chapman: I appreciate the work done by the United Nations disaster relief organisation, but, bearing in mind the outbreak of famine in Ethiopia and other African countries, does my right hon. Friend agree that the UN should be given more resources and greater responsibilities—for example, the gathering, storing and distributing of surplus food—if it is to do its job effectively?

Mr. Raison: There has been much talk about whether it is a good idea to have stockpiles. Having stockpiles in every area that might need them could be hideously expensive, but we must find the right answer. The world food programme projections for the arrival of grain at the port of Assab are 61,000 tonnes in December, 53,000 tonnes in January and 57,000 tonnes in February. Food is now being sent inland from Assab at the rate of 3,000 tonnes a day. That is a considerable quantity of food.

Mr. Buchan: Is not the point that we already have the stockpile? If we are looking for an international organisation, we have the Common Market, which has grain coming out of its ears. Will the Minister use his best efforts to ensure that the food is distributed quickly and will he remind his friend, the leader of the Tory group in Europe—Sir Henry Plumb—that we do not accept his cynical comment that grain stores should be sold? They have already been paid for and should be sent off to market.

Mr. Raison: It is essential to find the most effective way in which to handle the problem. I am committed to that. We have seen that food can be got hold of quickly, as can other emergency equipment. We are not suffering from a bottleneck in supplies.

The Economy

The Chancellor of the Exchequer (Mr. Nigel Lawson): With permission, Mr. Speaker, I should like to make a statement. As is now customary, I am laying before the House today an autumn statement which contains the Government's outline public expenditure plans for 1985–86, proposals for national insurance contributions next year and the forecast of economic prospects for 1985 required by the Industry Act 1975.
The Government remain committed to reducing taxation, and therefore to keeping firm control over Government spending. Following this year's public expenditure review, the public expenditure planning total for next year, 1985–86, has been set at £132 billion. As the House will recall, this is within the provisional figure for 1985–86 published in the public expenditure White Paper in February. The Government have thus succeeded for the third year running in holding the planning total to the level announced in previous White Papers.
After allowing for inflation, public expenditure next year is planned to be broadly the same as was planned for this year, and below the likely outturn for this year, which has been inflated by the cost of maintaining electricity supplies during the coal strike. With the economy continuing to expand, public expenditure as a percentage of national output should fall next year to its lowest level for six years. The revised plans contain a reserve for contingencies of £3 billion. This is £¾ billion less than the provisional reserve for 1985–86 allowed for in the February White Paper, when departmental spending plans for 1985–86 were less well defined, but £¼ billion more than this year's reserve.
The allocation of this £¾ billion to specific expenditure programmes, coupled with an increase in forecast receipts from the privatisation programme, has enabled most, though not all, programmes to show an increase in spending over the White Paper figures.
But to contain these increases to dimensions compatible with the overall £132 billion planning total has required some hard decisions. Thus, there will be increased spending on the National Health Service, but individual health authorities will be expected to become more efficient and to absorb any pay and price increases within the money made available to them. In addition, my right hon. Friend the Secretary of State for Social Services has already announced important measures to cut costs by limitations on NHS prescribing, and there will have to be increases in charges.
Again, spending on social security will increase, but to contain the scale of the increase my right hon. Friend will be announcing a number of new measures, including substantial savings in supplementary benefit provision for board and lodgings claimants. The 5 per cent. abatement of invalidity pension which has applied since 1980 will, however, be restored from next November.
Yet again, there will be increased provision for education, partly offset by a reduction in spending on student grants.
By contrast, because fewer young people than expected have needed to take up places on the youth training scheme, my right hon. Friend the Secretary of State for Employment is able to apply some of the consequential savings to expand other employment and training

measures, including the enterprise allowance scheme, within a reduced overall total. My right hon. Friend will be announcing his new proposals to the House later this afternoon.
Other programmes to have reduced provision include domestic assistance to agriculture and housing.
Fuller details of these and other changes are contained in the autumn statement itself. — [HON. MEMBERS: "Now."] Hon. Members will have an opportunity to ask questions in a moment.
I should add that the Treasury will be making its own contribution to the need for savings. The £1 coin has 50 times the life of the note, yet costs less than twice as much to produce. Accordingly, I have instructed the Bank of England to cease issuing £1 notes after the end of this year, although the note will continue to be legal tender for at least a year. This will save £3 million of public expenditure in the first year alone.
It may be for the convenience of the House if I take this opportunity to announce two other changes in the currency —[Interruption.]

Mr. Speaker: Order. I ask the House to give the Chancellor of the Exchequer a fair hearing. All these matters are debatable later on today and tomorrow.

Mr. Lawson: First, and subject to approval by the Privy Council, the ½p, which has not been issued since 29 March this year, will cease to be legal tender after 31 December. Secondly, on Thursday of this week the Bank of England will be issuing a new version of the £20 note which should be more difficult to forge—[Interruption.]

Mr. Speaker: Order. The Chancellor has several more pages of his statement to get through—[Interruption.]

Mr. Lawson: The Opposition may well laugh now—

Mr. Speaker: Order. Lest that last remark of mine should be thought to have been any reflection on what the right hon. Gentleman was saying, I hasten to say that I made the comment simply because I did not want too much of the time of the House taken up by interruptions of this kind.

Mr. Lawson: This year's review of expenditure plans has, as usual, also covered the Government's public spending plans for the two later years, 1986–87 and 1987–88. The details will be published in the usual way, in next year's public expenditure White Paper. They will show that total public spending is planned to remain broadly constant in real terms right up to 1987–88, which implies a continuing steady reduction as a proportion of the gross domestic product.
I now turn to national insurance contributions. The Government have conducted the usual autumn review of contributions in the light of advice from the Government Actuary on the prospective income and expenditure of the national insurance fund.
As last year, we have decided to reduce the taxpayer's contribution to the fund—the so-called Treasury supplement—by 2 per cent., bringing it down to 9 per cent. But this will not require any corresponding increase in contribution rates. Thus, the full class 1 rate will remain unchanged at 9 per cent. for employees and 10·45 per cent. for employers. In addition, employers will be relieved of


the burden of contributions on payments under the statutory sick pay scheme, which in due course will be extended to cover the first 28 weeks of sickness.
As usual, the earnings limit will need to be increased broadly in line with inflation. From next April, the lower earnings limit will rise to £35·50 a week and the upper earnings limit to £265 a week.
Next year, of course, employers will enjoy the full benefit of the abolition of the national insurance surcharge, which took effect only last month. Taking this into account, the total burden on employers in 1985–86 is expected to be significantly less in real terms than in the current year, 1984–85, despite a rising labour force.
My right hon. Friend the Secretary of State for Social Services will this afternoon announce details of the changes in the Social Security (Contributions, Re-Rating) (No. 2) Order 1984, and will lay before Parliament the accompanying report by the Government Actuary.
Finally, I turn to the Industry Act forecast. Since the Budget, the economy has had to endure a number of testing developments, both at home and abroad, of a sort which not so long ago would have driven it off course. This time, they have not done so.
Monetary growth has been in line with the targets I set at the time of the Budget, and inflation has remained low: perhaps 4·75 per cent. in the last quarter of this year.
Total national output, which reached its highest level ever last year, looks set to rise by a further 2·5 per cent. this year. Had it not been for the coal strike, growth this year would probably have been 3·5 per cent.
Investment has been rising particularly strongly. Indeed, over the economy as a whole, I expect it to reach a new all-time high this year.
Employment has been rising at a brisk pace since early 1983, but not yet strongly enough to check the rise in the numbers of those registering as unemployed. The outlook for jobs will, however, have been helped by the recent fall in interest rates which largely reverses the increase during the summer. Provided we stick firmly to present policies, the prospect is of further interest rate cuts ahead.
This year's PSBR is likely to turn out higher than the £7·25 billion I envisaged at the time of the Budget, chiefly as a result of the coal strike. If the strike were to end at Christmas, it would add some £1·5 billion to borrowing this financial year; and the public expenditure planning total would be exceeded by about the same amount. On that basis, as I indicated to the House on 30 October, I estimate that the PSBR for 1984–85 will be some £8·5 billion, subject to the usual margin of uncertainty at this time of the year. A PSBR of this size would still be comfortably the smallest proportion of GDP for well over a decade.
For next year, with continued firm monetary and fiscal policies, inflation is expected to edge down slightly to 4½ per cent. by the fourth quarter. Output and employment will continue to rise, with total output expected to be up by a further 3½ per cent. in 1985, of which about 1 per cent. represents the assumed recovery from the coal strike. Within this total, the forecast suggests that 1985 will be another good year for exports and industrial investment. Indeed, investment by non-North sea businesses is expected to rise in real terms by 7 per cent. next year, following an 11 per cent. rise this year.
The House will wish to know what all this means so far as prospects for next year's Budget are concerned. The forecast makes the conventional assumptions that income

tax and excise duties are both indexed in line with prices and that the PSBR is held next year to the £7 billion. or 2 per cent. of GDP, indicated in the medium-term financial strategy published at the time of the last Budget. It also takes into account the changes made in this year's Finance Act, which will take full effect next year and reduce taxation in 1985–86 by some £1¾ billion. Beyond that, the margin of uncertainty at this stage is very considerable, and the House will understand that the prospects for 1985–86 will need to be reviewed again. in the light of more up-to-date information, before I came to make my Budget judgment next year.
On this basis, I am glad to say that it does look as if there will be scope for some further net reductions in taxes in next year's Budget. I am sure that the whole House will welcome this prospect. The best figure that I can put on it at the present time is about £1½ billion.
The autumn statement is now available from the Vote Office and the House will no doubt wish to take it into account when we debate the economy tomorrow. It shows that for the third year running—that is, for every single year since the Government introduced cash planning for public expenditure—spending plans have been held at or below previous White Paper totals. It shows, too, that we are now in the fourth year of steady growth, with a further year of investment and export-led growth in prospect, and with no sign whatever of a resurgence of inflation. And the numbers in work are rising strongly for only the third time since the sixties.
The statement that I have published today sets the background against which further reductions in taxation should be possible, to help further stimulate the enterprise and dynamism of the British economy and thus produce more jobs for our people.

Mr. Roy Hattersley: May I first ask the Chancellor of the Exchequer a specific question about one item in his autumn expenditure review about which I suspect the House expected to hear and was disappointed not to hear? Is there, or is there not, to be a cut in the aid budget? Is the Chancellor aware that to cut overseas aid by any amount at this time would be to do more than demonstrate callous insensitivity? Cutting the aid programme while men and women are starving in Ethiopia would be to flaunt the Government's inhumanity.
May I, or rather may we—this is a matter of concern to the whole House—be given a categorical assurance that there is to be no cut in the aid budget and that the Chancellor has not, as many of us suspect he has, simply left the dirty work to the Foreign Office to leak or give out the news next month or the month after?
As always, the Chancellor counterfeited confidence in the eventual success of his policies. We were told exactly the same story last year.

Mr. Lawson: And it came to pass.

Mr. Hattersley: As the right hon. Gentleman shouts that his confidence has been justified, will he confirm that industrial output is lower than it was before last year's autumn statement and remains 8 per cent. lower than it was during the last year of the Labour Government? Will he also confirm that in September we simultaneously endured the worst balance of payments figures, the lowest value of sterling, the highest level of taxes and the highest unemployment in the history of this country?
Will the right hon. Gentleman describe the definition of success by which he justifies his assertion today? Let me tell him this: whining about the effects of the coal strike comes very ill from a Chancellor of the Exchequer who only four months ago described it as a good investment for Great Britain. Nor is the dispute the fundamental cause of the failures which I have just described. Why, despite the record of failure, does he still pretend that the economy can be rescued by manipulation of the PSBR and the money supply?
In today's statement the right hon. Gentleman has attempted, with rather less than complete success, to keep faith with the arbitrary targets for those two indices that he set himself. But while he has attempted to keep faith with those figures he has wholly betrayed the unemployed —both the 3·5 million men and women now out of work and the many more workers who will join the queue of the unemployed because of the additional deflation which the public expenditure programme now represents. Let the House and the country remember that the deflation would, of course, have been very much worse had the Chancellor not been deserted by the Prime Minister last Thursday in the Cabinet and had he been allowed to plunge us into an even greater slump than that which we face during the next 12 months.
Let me ask the right hon. Gentleman a question about unemployment, around which he skated with such an absence of dexterity. Has the right hon. Gentleman the courage to tell us now what the Government Actuary estimates as the increase in unemployment next year? The Government Actuary's figure is a statistic upon which much of the Government's planning is based. Will the right hon. Gentleman now tell us what that figure is? Is it true that the Actuary anticipates an increase in unemployment of about 400,000 men and women? If so, why did the Chancellor not have the courage to tell us so during his initial statement? Perhaps the real reason is that he knows, as we know, that responsibility for that increase lies in no small measure with him and the policies that he has outlined today.
In two specific areas the economy's deflation is both obvious and intentional. The Government are now pushing up energy prices, both through the imposition of corporation tax on the gas and electricity industries and through an increase in the surreptitious fuel tax as imposed through the external financing limits. Why has the Chancellor not told us today what those increases are to be—or must the Secretary of State for Energy make that announcement in payment for opposing the Chancellor's suggestion that they should be even higher and an even greater burden on industry than that which the Chancellor was able to impose on his reluctant colleagues?
May we be told the proposed increase in presciption and dental charges, or is the Chancellor ducking that one as well? Last year the right hon. Gentleman tried to bolster up his counterfeit enthusiam by giving us dubious figures. This year he has tried to maintain his position by giving us virtually no figures at all. That does nothing to encourage our confidence either in him or in the policies that he outlines. I think that the Chief Secretary will tell him the answer to my question almost immediately.
Has an estimate been made of the effect on the construction industry of the further cutback in public sector housing? We are told that the Secretary of State for

the Environment believes that in some way he has resuscitated the housing programme. In fact, he has simply arranged for it it bleed to death more slowly than the Chancellor intended. In their first five years of office the Government halved the housing building programme, and this year both public and private housing building has further declined, yet the Chancellor proposed massive cuts, and has implemented substantial cuts.
How many more construction workers has the Chancellor condemned to unemployment by today's statement? Why do the Government assault the construction industry yet again, when everyone—even the CBI and, indeed, the Daily Mail—calls for more construction expenditure as a sure way of reviving the economy?
Will the Chancellor confirm that the whole object of his manipulation is to obtain £1½ billion, for distribution next year? Of course, part of that £1½ billion, if the Chancellor has his way, will be for cuts in direct taxation and will be financed by increases in indirect taxation. On the basis of previous records, indirect taxation will rise more than direct taxes fall.
That £1½ billion could be used in two ways. A reduction in direct taxation will create few jobs. If that £1½ billion were spent in the public sector, it would put about 250,000 men and women back to work. Why does the Chancellor, in every aspect of his policy, always choose the high unemployment option? I fear that the answer is that a permanent pool of 3 million unemployed is no longer simply the consequence of Tory policy but is an essential ingredient of it. That figure, that target, that objective and that intention is carefully planned and callously calculated. It represents a heartless disregard for millions of families, which the people will not tolerate.

Mr. Lawson: The right hon. Gentleman asked a large number of questions. Aid and the whole of the Overseas Development Administration is included in the budget for Foreign and Commonwealth Affairs, which is unchanged.
The right hon. Gentleman referred to last year's autumn statement and to my predictions then. He poured the same scorn on my predictions then as he did today, but those predictions were borne out entirely by events.
The balance of payments on current account is expected to be roughly in balance this year because of the substantially increased imports of oil as a result of the coal strike. We expect it to be in surplus by about £2½ billion next year. If a Labour Government had achieved anything like that, they would not have been able to believe their good fortune.
The right hon. Gentleman asked me about the unemployed. I have to tell him that the answer to unemployment is to create a more vigorous and enterprising economy. That is why it is essential to reduce the burden of taxation. The right hon. Gentleman also asked about the Government Actuary's assumptions. I stress that they are assumptions, not forecasts. The assumption is that unemployment in Great Britain, excluding school leavers, will average 3 million this year and 3 million next year—1985–86.
I can assure the right hon. Gentleman that there is no question of any sort of energy tax. Price increases are a matter for the industries concerned. I have no reason to believe that price increases will not be broadly in line with


the rate of inflation. Prescription charges are a matter for my right hon. Friend the Secretary of State for Social Services.
The right hon. Gentleman is mistaken in suggesting that substantial cuts in housing investment are to be made. He has confused the net expenditure line with the gross expenditure line. The net expenditure line has come down significantly as a result of a considerable increase in council house sales The success of that programme is one of the Government's most important achievements. The reduction in gross expenditure is very small indeed.
The reduction in taxation indicated, with a margin of uncertainty, for the next Budget is £1½ billion net, not gross. There will be a net decrease of about £1½ billion. There is no point in going into the right hon. Gentleman's phoney figures for job estimates and so on. It is not the Government who are banking on unemployment. It is the Opposition who are doing that and who are exploiting the plight of the unemployed for cheap party gain.

Several Hon. Members: rose—

Mr. Speaker: Order. I remind the House that, important though the statement is, there is an important debate to follow. What the Chancellor has said is debatable today, as it will be tomorrow. I propose to allow questions from Back Benchers to continue until 4.30 pm.

Sir William Clark: Is my right hon. Friend aware that Conservative Members welcome his statement and congratulate him on keeping the public expenditure total this year within the target set last year? Does he agree that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) made cheap party points simply to get unanimity within his party? I suggest that my right hon. Friend ignores his strictures and stays on course.
Is my right hon. Friend aware that industry will welcome his statement about the national insurance fund, which will keep down labour costs? The sneering remarks of the right hon. Member for Sparkbrook about a reduction in taxation will not help unemployment. It shows that the right hon. Gentleman does not understand how an economy works. If that money is left in the hands of the taxpayers. they will spend it in a better way than the Government will. We congratulate my right hon. Friend.

Mr. Lawson: I am grateful to my hon. Friend for his remarks. He is right to say that this Government's strategy is to maintain public expenditure at a constant level in real terms, which means that as the economy steadily grows there will be progressive scope for further reductions in taxation. That is the strategy and we are well on course. That is the way to create more employment.

Dr. David Owen: Is the Chancellor aware that there will be certain scepticism about his figures because the Government Actuary's estimate of unemployment last year was grossly inaccurate? Is not the Actuary's assumption this year only 3 million, although we already have more than 3 million people out of work? Does the Chancellor accept that his statement will be judged by the action that he takes to reduce unemployment? Nothing that he has said today gives us any grounds for belief that what he is anticipating in public expenditure will do anything more than add considerably to unemployment. The cut in urban aid, the £600 million cut in local government capital account and the £65 million cut in the housing account will all work through to add to unemployment.
Did the right hon. Gentleman not say that he hopes to consider using £1½ billion for tax reductions? He gave no sign that he proposed to cut employer costs, which would provide an incentive for employers to engage more workers. Did he not give every sign that he intends to reduce direct taxation, as he has done in the past, to help those in jobs and on high incomes?
Will the right hon. Gentleman accept that the House expects him to use any money available to create more jobs, which means increasing capital spending —especially in the construction industry — and cutting employer costs through the restructuring of national insurance?

Mr. Lawson: The House will recognise that the spokesman for the Social Democratic party is not in favour of lower taxes. Of course this Government will do everything within their power to reduce the level of unemployment. However, it is an illusion to suppose that that can be achieved by an increase in public expenditure. Indeed, during the time of the Government of which he was a member the most rapid rise in unemployment occurred when public expenditure was rising fastest.

Mr. Terence Higgins: Is my right hon. Friend aware that much of what he has said will be welcome? However, the Treasury and Civil Service Select Committee will need to examine his proposals in detail before a final judgment is made.
Can my right hon. Friend confirm that, as spending plans roll forward, it is usual for the Contingency Reserve to be less in the year ahead than it was originally, because uncertainty is less? Will additional payments be made to the EEC under the so-called inter-governmental agreement? In what way were those appraised in relation to competing claims for public expenditure?

Mr. Lawson: I thank my right hon. Friend for his remarks and also for the important part that he plays as Chairman of the Select Committee. I look forward to its report on the autumn statement, which will be helpful to the House in its debates.
My right hon. Friend's remarks about the Contingency Reserve are correct. The figures involved in the inter-governmental agreement have been fully taken into account in the statement that I have given to the House.

Mr. Robert Sheldon: Is this not the fifth year in which the Government have said that the reduction of taxation will lead to a reduction of unemployment? Why has that not happened? Has the Chancellor taken account of what the CBI said when it called for the regeneration of British manufacturing industry and assistance for Infrastructure projects? What will the right hon. Gentleman say to the CBI?

Mr. Lawson: Opposition Members fail to take into account the world climate, and they show a remarkably parochial view. Since the general election, when I took on the responsibility of Chancellor, unemployment in Britain has risen by 3·7 per cent., while in the remainder of the Community it has risen by 5·2 per cent. In Britain employment has risen by 1 per cent., while in the remainder of the Community there has been no rise in the number of people in work. In Britain gross domestic: product has risen by 3 per cent., while in the remainder of the Community it has risen by 1½ per cent

Mr. David Howell: Does my right hon. Friend agree that, despite his struggle to keep within his planning totals, nothing should now be allowed to stand in the way of the very substantial tax cuts that are required to create jobs — because they are the most powerful engine of job creation—to reduce the cost of hirings, to cope with the emerging and changing pattern of work in society and to encourage that pattern of work?

Mr. Lawson: My right hon. Friend has consistently advocated reductions in taxation, and he has been consistently right. It is a central plank of the Government's policy, which will bring about increasing employment opportunities for our people.

Mr. Richard Wainwright: Is the Chancellor aware that the economy could not—to use his words—be driven off course because, apart from North sea oil, it is stuck fast in the ice of the Government's persistent deflation, to which he announced no end? Why, when the right hon. Gentleman is willing to devote time in his speech to trivia about the halfpenny, did he say nothing about capital expenditure to maintain the nation's public assets? What percentage of the planned expenditure for 1985–86 will be capital expenditure?
Does the right hon. Gentleman realise that his interpretation of the Industry Act forecast is intolerably complacent? He announced a puny figure for future economic growth that will do nothing seriously to prevent a further rise in unemployment. Is he not ashamed to contemplate the success of other industrial economies in the world compared with the modest forecast of growth that he provided this afternoon?

Mr. Lawson: I am astonished at the hon. Gentleman, because the Liberal party always turns its eyes to the European Community. As I reminded the House a few moments ago, our performance in both growth and other indicators has been significantly better than that of other members of the European Community.
It is too soon to give a precise breakdown of public expenditure plans between capital and current investment. I am sure the hon. Gentleman will welcome the fact that this year we expect business investment— and that is non-North sea business investment—to increase by 11 per cent. in real terms, followed by a 7 per cent. increase in real terms next year. The level of investment in the economy has never been higher than it is this year.

Mr. Reg Prentice: Is it the Government's intention that the overseas aid programme for next year will keep pace with inflation and represent the same real value as the programme this year? Does my right hon. Friend recognise that anything less than that will not be tolerable in the view of millions of people of all political persuasions, who were shocked by recent events?

Mr. Lawson: I thank my right hon. Friend for his comments. I know that there is a great deal of concern on both sides of the House over this issue. Total provision for the Foreign and Commonwealth Office, including the ODA, remains as in this year's White Paper and is up 4½ per cent. in cash terms over the previous year, which is roughly in line with inflation. The breakdown of the total budget of the Foreign and Commonwealth Office is a matter for my right hon. and learned Friend the Foreign Secretary. The House will be aware that overseas aid accounts for well over half the total budget of the Foreign and Commonwealth Office.

Mr. Bryan Gould: We understand the Chancellor's continuing failure to deliver his much-mentioned cuts in the rate of taxation, but why does he have to make further self-defeating cuts in public expenditure and further increases in indirect and hidden taxation to make room for the cuts? What has he done with the £11,000 million which he now receives every year from the North sea revenue, which his predecessors never even remotely enjoyed?

Mr. Lawson: There is no question of a failure to cut direct taxation. If income tax had remained at the levels which we inherited from the Labour Government, and even if, which is highly unlikely, all the thresholds had been fully revalorised every year, the burden of income tax would still be £4 billion more than it is now

Sir Peter Blaker: If my right hon. Friend's forecast of growth in output and the movement in prices is borne out, will we not have had steady growth in output for four or five years, accompanied by static or falling inflation? Would that not be something of a record for Britain in recent decades?

Mr. Lawson: My right hon. Friend is correct. That is something that has not occurred since the war. Sustained growth with no resurgence of inflation is something which Britain has long sought, including by my predecessors, and now it is coming about for the first time

Mr. Willie W. Hamilton: Despite two attempts to answer questions on the aid programme, will the Chancellor of the Exchequer now give a straight yes or no in answer to my question? Is the aid programme to be cut, or is it not? What savings does he expect to make as a result of the revamping of the regional policy? Those in high unemployment areas are deeply concerned about that.

Mr. Lawson: As I have made clear, total provision for the Foreign and Commonwealth Office is unchanged from the White Paper figures. The precise amount that is devoted to aid within that programme is a matter for my right hon. and learned Friend the Foreign Secretary. The revamped regional policy will be made known to the House towards the end of the month. One of its features —this was made clear in the White Paper—is that it will be more job-related than the old policy.

Sir Anthony Grant: Does my right hon. Friend agree that the preposterous claims of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and the public expenditure increases which he proposes offer no solution to long-term unemployment and were effectively refuted by a previous Labour Prime Minister, who presided over a Government of which the right hon. Gentleman was a member, when he said that it is not possible to spend one's way out of a recession? Is my right hon. Friend aware that his package would be much more acceptable to Conservative Members if he spelt out clearly that the £1·5 billion in tax reductions that he proposes will be in direct taxes and will be designed to encourage industry and enterprise in the spread of ownership of all sorts throughout the community?

Mr. Lawson: I thank my hon. Friend for his remarks, of which I shall take full account when I come to frame the Budget.

Mr. Norman Atkinson: What sort of decadent morality is it for the Chancellor to reiterate his


commitment to reduce taxation when he knows that the poor are getting poorer and the rich richer? He knows that unemployment will remain the same in 1985 and 1986, and probably into 1987. How does he square his recent statements about reducing unemployment with the distribution of the £1·5 billion which he has announced, 85 per cent. of which will go to those with above average earnings?

Mr. Lawson: The hon. Gentleman claims to be able to forecast precisely what will happen to unemployment. I do not make that claim. The living standard of an average family with an average income has risen steadily during the Government's period in office and is now at the highest level ever.

Mr. Peter Tapsell: May I repeat to my right hon. Friend the basic question which I have been putting to him and his predecessor ever since it became clear in the winter of 1978–79 that the world was moving into serious recession? Does he agree that one of the main objects of British economic policy should be to increase our national wealth over and above the fortuitous and inevitably temporary bonus of North sea oil? If he does agree with that, how does he account for the fact that the two most succcessful economies in the world, Japan and the United States, have consistently run public sector borrowing requirements very much greater than our own, with the result that they have much higher levels of employment and lower rates of inflation? Is it not now time for the Government to launch a real campaign to bring down unemployment?

Mr. Lawson: I share my hon. Friend's concern about unemployment. Given the views which he has expressed elegantly over a number of years, I am sorry that he gives no credit to the Government for their success in reducing inflation. He need not worry too much about North sea oil being a temporary phenomenon, for it will certainly see out his active life. It is patently wrong to suggest that the United States has consistently run a higher public sector borrowing requirement than our own. Over the years it has consistently run a lower borrowing requirement than we have. It is only recently that its borrowing requirement has exceeded ours.
My hon. Friend is right to point to Japan and the United States as being the most successful economies in the Western world. It is striking to note that they are the economies which have the lowest proportion of public expenditure to gross domestic product, and the lowest proportion of taxation to GDP.

Mr. Nigel Spearing: Will the right hon. Gentleman come out from behind the Foreign Secretary on the aid issue? Is it not a fact that, even if total funds increase by 4½ per cent. to cover domestic inflation, a significant proportion of the expenditure of the Foreign and Commonwealth Office is on sustaining services abroad? If the value of sterling and the rate of inflation differ, those services will have to be sustained. Is it not a fact that the amount available for aid could be reduced? Surely it is the Chancellor's responsibility to see that it is retained at no less a level than that for the current year.

Mr. Lawson: Implicit in the hon. Gentleman's question, as we are talking about 1985–86, there seems to be the view that the dollar is likely to continue to rise in

1985–86. I do not know what will happen to the dollar, but most observers regard it as more likely that the dollar will fall.

Mr. Michael Grylls: As my right hon. Friend has said, 11 is not his responsibility to fix the level of prices in the nationalised industries, particularly the price of electricity. However, can he nevertheless give an assurance that, as Chancellor of the Exchequer, he will not increase the rate of return on capital, which in turn would force the industry to put up electricity prices, which could be serious for the steel and chemical industries?

Mr. Lawson: I am aware of the sensitivity of electricity prices for the chemical and steel industries. It is necessary for the electricity industry to earn a rather better rate of return than it has been earning hitherto, hut, nevertheless, I see no reason why that should require price increases in excess of inflation.

Mr. James Callaghan: As this is the first time within my recollection that the Government have failed to give a separate figure for overseas aid, is the Chancellor aware that unless he does so he will be regarded as concealing something? Why can he not tell us now what the figure is and why the Government are leaving it undetermined in this way?

Mr. Lawson: I assure the right hon. Gentleman that I should not dream of concealing anything from him. The plain fact of the matter is that the global figure that was agreed for the total expenditure of the Foreign and Commonwealth Office, including the ODA programme, and the division of that into the various component parts, is a matter for my right hon. and learned Friend the Foreign Secretary.

Mr. Ian Lloyd: My right hon. Friend will doubtless have made his comments on the dismal relationship between the many efforts made to save a few hundred million here and there over the whole range of public expenditure—I refer particularly to fundamental British science—and the addition of £1·5 billion to the coal cost, bringing it to a total of £2·8 billion, to finance Mr. Scargill's takeover bid? Is it not essential that the country should realise the result of these figures? The country does not understand what a billion means, but It is about £56 per head, or £140 per family

Mr. Lawson: My right hon. Friend is right to draw attention to those substantial figures, and I am sure that the House will welcome the continuing increase in the number of miners returning to work.

Mr. D. E. Thomas: What is the precise reduction in the urban programme, and what hope is there for local authorities in inner cities and in old industry communities as a result of the reduction in real terms of 3 per cent. in local government spending?

Mr. Lawson: The urban programme will still be running at a substantial level, despite the reductions that have been set out.

Mr. Nicholas Budgen: Will my right hon. Friend give the House further details of the reduction in domestic support for agriculture? Es he aware that there will be widespread support throughout the House for these reductions, as there is little argument in favour of having a second stimulus in addition to high EEC


prices at a time when agricultural policy is creating little extra employment and changing for the worse the face of the British countryside?

Mr. Lawson: My hon. Friend never lacks originality. The biggest contribution to such reductions is a decrease in capital grants, and I believe that my right hon. Friend the Minister of Agriculture, Fisheries and Food is putting out a press release, or perhaps has already done so, setting the matter out in more detail.
I have just been reminded, and I am sure that the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) would like to know, that this is not the first occasion on which a combined figure has been given for the Foreign and Commonwealth Office and the ODA.

Mr. John Evans: Why has the Chancellor one again rejected the argument put forward by his right hon. and hon. Friends from the wet end of the Conservative party that an increase in public expenditure and capital infrastructure projects will do far more for employment than a reduction in direct tax for many of his rich friends? What happened to the Prime Minister's promise that the pound note was sacrosanct?

Mr. Lawson: My right hon. Friend the Prime Minister made no such statement and never used the word "sacrosanct" or anything like it. As for unemployment, the House has already been reminded that the right hon. Member for Cardiff, South and Penarth, who is a former Prime Minister, made it clear to a Labour party conference that there was no way that one could spend oneself into higher activity. The only way to create more jobs is by having a more competitive and enterprising economy. That is what we are on the way to achieving, and tax cuts are an essential ingredient in that.

Mr. Robert Rhodes James: My right hon. Friend said that the budget of the Foreign and Commonwealth Office was to be held at the present level for 1985–86. Does this not mean, even on the United Kingdom inflation figure, a reduction of 5 per cent. in real terms? Furthermore, if we add to that the impact of much higher inflation rates abroad and the continuing weakness of the pound against the dollar, does this not represent a further reduction in the real value of the foreign and overseas budget? Where is the money coming from? Is it coming from the closing of embassies, the dismissal of staff, the reduction of the British Council, reductions in the BBC overseas service, or from the overseas aid programme?

Mr. Lawson: My hon. Friend has misread the columns of figures in the autumn statement. The provision for the Foreign and Commonwealth Office for this year, 1984–85, is £1,800 million. Under the revised plans for 1985–86, the provision is £1,870 million, an increase of £70 million, or approximately 4½ per cent. As for the foreign currency element, it is difficult to say what will happen to foreign currencies in the future. I have no reason to believe that sterling will fall in relation to the dollar over the year to 18 months ahead.

Mr. Dave Nellist: The Chancellor thinks that unemployment will be reduced by further cuts in taxation. How is it that under his stewardship tax cuts of £4,500 million have taken place,

£2 billion of which have gone to the top 1 per cent. of the population earning more than £20,000 a year and only £135 million of which has gone to the bottom quarter of the population, but unemployment has now reached real levels of 5 million? What further tax cuts can reduce unemployment?

Mr. Lawson: The overwhelming proportion of the reductions in income tax that there have been have gone to people with below average or slightly above average incomes and not to the rich. As to the total burden of taxation, during the first Parliament of this Government we were not able to reduce taxation overall because we had inherited a substantial, grossly excessive budget deficit or borrowing requirement, which had to be brought down. All our efforts had to be directed towards that. Now that we have achieved that during our first term, we are in our second term of office and can really get down to the business of reducing taxation.

Mr. Jonathan Aitken: Is my right hon. Friend aware that the feebleness of the Opposition's attack shows that he has made an autumn statement of impregnable virtue and prudence? In particular, will my right hon. Friend accept congratulations on increasing the enterprise allowance, which has done much to stimulate jobs, and is he aware of the welcome that we have given to his decision to cut back the widespread abuses in the DHSS allowances for board and lodgings?

Mr. Lawson: I am grateful to my hon. Friend for his support. I know that he will be especially interested in the details of the improvements to the enterprise allowance scheme and other employment and training schemes, which my right hon. Friend the Secretary of State for Employment will be able to announce shortly.

Mr. Hattersley: As the Chancellor has argued all afternoon that his statement represents a sovereign cure for the economy next year, why was he arguing for quite different packages as late as Thursday last week?

Mr. Lawson: There is no truth whatsoever in either part of the right hon. Gentleman's assertion.

Mr. Tim Yeo: Will my right hon. Friend join me in condemning the outrageous Opposition slur that unemployment is in some way an instrument, or possibly even an objective, of the Government? Does he agree that two of the most important factors in reducing unemployment are lowering the rate of inflation and maintaining a steady rate of economic expansion?

Mr. Lawson: My hon. Friend is right. The Opposition tried to blame the increase in unemployment on the Government at the time of the general election. The people did not believe them then, and they do not believe them now.

STATUTORY INSTRUMENTS, &c.

Ordered,
That the Customs Duties (ECSC) (Amendment No. 5) Order 1984 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Customs Duties (ECSC) (Amendment No. 6) Order 1984 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Consular Relations (Privileges and Immunities) (People's Republic of China) Order 1984 be referred to a Standing Committee on Statutory Instruments, &amp;c.


That the draft Crown Agents Commencing Capital Debt Order 1984 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Peter Lloyd.]

Points of Order

Mr. Dennis Skinner: On a point of order, Mr. Speaker. You will have noticed that during questions to the Chancellor of the Exchequer the Leader of the SDP, the right' Member for Plymouth, Devonport (Dr. Owen), asked a question early on as a result of you giving him the opportunity to do so. He seemed to get in very early. Some hon. Members on both sides of the House could not ask a question, and I should have thought that it was taking things a little too far even for this pompous
sod down here—

Mr. Speaker: Order. I must ask the hon. Gentleman immediately to withdraw that word, which I will not mention again.

Mr. Skinner: I withdraw the word "pompous".

Mr. Speaker: It is not that word but the other one that I want the hon. Member to withdraw. [HON. MEMBERS: "Withdraw."] The hon. Gentleman knows perfectly well that moderation of language in our proceedings is all-important if we are to have civilised debate. He is an experienced Member of the House. I appeal to him at the beginning of this Session—will he please now withdraw that remark?

Mr. Skinner: No.

Mr. Speaker: I order the hon. Member to withdraw from the Chamber for the rest of this day's sitting.

The hon. Member, having used a grossly disorderly expression, was ordered by Mr. SPEAKER to withdraw the same, but he declined to comply with that direction; whereupon Mr. SPEAKER, pursuant to Standing Order No. 24 (Disorderly conduct), ordered him to withdraw immediately from the House during the remainder of this day's sitting; and he withdrew accordingly.

Mr. Laurie Pavitt: May I seek your guidance, Mr. Speaker? You are right to say that there are still two days for the debate on the Loyal Address and that there may yet be opportunities to pursue other matters. An important matter that has not yet been discussed is prescription charges. Have you received a request from the Secretary of State for Social. Services to make a statement to the House, which the House can then debate, on increased Health Service charges?

Mr. Speaker: I have not received such a request, although it may come. I repeat to the hon. Gentleman and to the House that I allowed a full hour for questions on the Chancellor's statement, which I realise is extremely important, but there are two further days of debate on the Loyal Address. I am certain that the matter will arise again at Question Time and in subsequent debates.

Mr. Ian Wrigglesworth: On a point of order, Mr. Speaker, further to that raised by the hon. Member for Bolsover (Mr. Skinner). Would it not assist the hon. Member to overcome his problems if you would ensure that hon. Members did not wish to leave the Chamber because of so many boring interventions by Labour Members, and because of two interventions from Labour Front Bench spokesmen, one of which amounted to a speech longer than the one made by the Chancellor of the Exchequer?

Mr. Speaker: Order. I have already dealt with the hon. Member for Bolsover.

Mr. Tom Clarke: Further to that point of order, Mr. Speaker. Back Bench Members much appreciate your considerable role in ensuring that we are heard, but today many people were disappointed because the Leader of the SDP abused the House, after you had said that you were giving time to Back Bench Members, by catching your eye and thereby excluding many hon. Members who wished to make a point.

Mr. Speaker: The right hon. Member for Plymouth, Devonport (Dr. Owen) is a Back Bench Member.

Mr. Jeremy Corbyn: Further to the point of order raised by my hon. Friend the Member for Brent, South (Mr. Pavitt), can you, Mr. Speaker, tell us when we are likely to be told about the increase in NHS charges, which is causing fear and concern to users and workers in the service even today?

Mr. Speaker: That is not a matter for me.

Orders of the Day — Debate on the Address

[FIFTH DAY]

Order read for resuming adjourned debate on Question [6 November],

That an humble Address be presented to Her Majesty,
as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament — [Sir Paul Bryan.]

Question again proposed.

Orders of the Day — Industry and Employment

Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition and his right hon. and hon. Friends.
I have received many applications from hon. Members who wish to speak in the debate on the Loyal Address. This is the fifth day. It is not a day on which I can apply the 10-minute limit recently agreed by the House, because the debate on the Loyal Address does not fall within the categories of debate to which the new procedures apply. Therefore, I appeal to hon. Members to exercise restraint wherever possible and to confine their contributions, if they can, to 10 minutes. I have received more than 40 applications to speak today, and although a time limit does not apply to the Front—Bench spokesmen, I hope that they will take note of what I have said.

Mr. John Smith: I beg to move, at the end of the Question, to add:
But humbly regret that the Gracious Speech proposes to continue policies which imperil Britain's industry and relentlessly increase unemployment and fails to propose any effective measures to rebuild the nation's industrial base and create new opportunities for employment.
Before we embark on what will inevitably be a deeply controversial debate, may I express what I am sure is the unanimous regret of the House that the Secretary of State for Trade and Industry cannot be in his customary place to take part. There are few members of the Government with whom the Opposition disagree more sharply, and, as we know, those disagreements are often directly expressed on both sides. However, we have nothing but the deepest respect and admiration for the courage and fortitude which he and his wife have shown in the aftermath of the terrible events at Brighton. To them both we send our greetings, and we hope and pray that their recoveries will be soon and complete.
The amendment to the Loyal Address is sharp and to the point. The Gracious Speech, and the Chancellor's statement earlier today, show little appreciation of the deep crisis that affects a country with 4 million unemployed. They show no recognition of the perils that face a country part of whose industrial structure has already collapsed, and much of which faces the dangers of the future in a weakened and debilitated state. It is a


triumph of euphemism over reality to say, as Government apologists regularly do, that our industry is leaner and fitter. In truth, it is smaller and weaker.
More than five years ago, the Government, after abusing the policies of their predecessors—even those of different political hues—changed economic course. We were told that new, bold policies were to be the basis of a new economic success that would secure full employment and an expanding economy. What has happened? Not only has unemployment soared to unprecedented levels, and is still rising, but, as the right hon. Member for Chesham and Amersham (Sir I. Gilmour) said only today in The Guardian, manufacturing production is 12·5 per cent. below its peak level in 1979 when the Labour Government left office and manufacturing investment, which is the key to our future prosperity in that area, is 30 per cent. below the level in 1979.
Therefore, we have suffered, are suffering and look like continuing to suffer in an even more aggravated form the miseries of mass unemployment, with all that that means in terms of personal hardship, disappointment, frustration, bitterness, family distress and social division.
How can this be the country in which, as the Chancellor of the Exchequer smugly claimed in his Mansion House speech, the economy is in good shape? The truth is that five years ago we did not embark upon the high road to prosperity, but were led into a monetarist cul-de-sac. This great country has been made the laboratory for the monetarist experiment. Not only has the experiment failed, as all except the purblind on the Conservative Front Bench can now see, but the Government do not know what to do next. When they are confronted with their failures, like the generals of the first world war, they reinforce their mistakes. We saw a classic example of that today in the statement by the Chancellor.
Therefore, the first charge that we make against the policies in the Gracious Speech is that they are the same policies as those that brought us to our present sorry state, and must be changed. But I regret to say that there was not a hint in the Gracious Speech or today's statement that anyone in the Government realises that necessity. That statement was again bad news for the unemployed and for our industry.
The Government sometimes claim that all would have been well with the experiment but for the international recession. "It is not our fault", they say, "but the necessary consequence of international events beyond our control." Indeed, the Chancellor of the Exchequer hinted as much this afternoon. Of course there has been an international recession that has aggravated the problems that any Government would have been bound to face, but it is also a fact that the Government have advocated internationally the same deflationary policies as they have practised at home. There is a peculiar irony in seeking an excuse in external events. The charge that we make is that their policies, instead of countering the effects of the international recession, have aggravated it and made its impact deeper and more serious for our citizens.
Let us not forget that this country faced the international recession with an enormous advantage denied to all our western neighbours except Norway — the windfall of North sea oil. From 1979 until the end of this year the Government will have received over £40 billion in North sea oil revenues and they are presently receiving £11 billion each year as North sea oil production is forced up to record levels to finance Britain's rising unemployment.

None of our principal international competitors had an advantage like that. It is not just an advantage in terms of revenue that the Chancellor does not have to raise otherwise, but an enormous advantage in terms of the balance of payments and the balance of trade where at present it hides some ugly truths about our non-oil trading position.
What have the Government done with that windfall of North sea oil? They have spent it all—every penny piece of it—in paying for the extra unemployment that they have caused since 1979. That statistic can be easily computed. The House of Lords Select Committee on Unemployment calculated that it costs the state at least £5,000 a year for every person who becomes unemployed in terms of unemployment or social security benefit. lost insurance contributions, lost taxes and lost value added tax. That is a widely accepted figure. On any calculation, there are an extra 2 million unemployed, even taking the Government's fiddled figures. The sum of £5,000 multiplied by 2 million is £10 billion, which is roughly the same as the North sea oil revenues that we are receiving. So as the money comes in one door from the North sea out it goes through another door to pay for the extra unemployment that the Government have created.
What will historians make of that when they ask what Britain did with its North sea oil revenues? They will hardly believe that the Government spent it all on the unemployment over which they presided. Back in 1978–79 when the argument started about what we would do with our revenues, I thought—I was Minister responsible for oil at the time — that there would be an interesting debate between the Left and the Right. The Left would argue for the Government spending the money on regional programmes, support for industry, education, training and a whole host of things. I thought that the Right would argue that the money should be given away in tax cuts, as the Right would put it, and used in a series of individual rather than community choices. However, I never thought then that we would devise a new and devious plan—that we would do neither, but save it all up so that we could spend it all on unemployment. I shudder to think what a historian will make of those events when the truth is ultimately revealed.
Therefore, the Government had the advantages that none of their predecessors had. The previous Labour Government, who did so much to secure that North sea oil came on stream by 1980, received £800 million compared with the £40 billion that has come to their successors. Therefore, the Government's predecessors did not have those advantages, although they did better in managing the economy than the Government have since 1979. None of our competitors have had those advantages, yet we have weathered the recession worse than any of them.
Politically, the recession is used as an excuse. The Government say that unemployment is not the result of their policies or mismanagement but a fact of life. It is like the plagues of the middle ages, something one cannot do much about. One can hardly ameliorate it, and one must suffer and endure it. I think that the public are beginning to become suspicious about that.
There has been a more subtle political ploy in recent years. The Prime Minister has been a specialist in the art of appealing for short-term sacrifice for long—term gain. She struck a chord in that peculiar combination of stoicism and masochism that is deep in the British character. When the Prime Minister said that we must suffer unemployment


now because that is necessary to get real jobs in future, the people gave her the benefit of the doubt. When cuts were made in necessary services and children left school to go on the dole, the people wondered but kept saying, "Maybe it is necessary after all." How many of us have heard the phrase, "But maybe it is for the best"? Such phrases come from the lips of people who suffer more from those policies than from many others.
The Prime Minister has cynically benefited from that popular sentiment and its ruthless exploitation by her Government. But I warn her and her Government that the risk that was inherent all along in that political strategy is now coming home to roost. When the people realise that their sacrifice was not for the best, that short-term suffering leads not to long-term benefit but to greater longterm suffering, that the lost jobs were the precursors not of real jobs in the future but of rising unemployment and that the cut in services is not temporary but may be permanent, their anger, which is slowly rising, will be directed with particular force against the Prime Minister and a Government who deceived their better nature so thoroughly and comprehensively.
The truth is that after five years of unemployment reaching record levels, the prognosis is that it will go on rising relentlessly and remorselessly. It will no longer do for Ministers to say, as they do, that they really care. In debate after debate they have told the House that they do not mind criticism but that they object to the accusation that they have a lack of concern for the unemployed. No doubt we shall hear this from the Secretary of State for Employment. How often have we heard Ministers say that Opposition Members should not claim that they have a monopoly of concern for the unemployed? We have given them the benefit of the doubt until now, but after the Gracious Speech and today's statement by the Chancellor the Government have a simple choice about whether to change their policies. If they do, that will show that they care, but if they refuse to do so we shall allege continuously that they do not and cannot possibly care about the consequences of their policies.
Unemployment is not, as the Chancellor sought to make out in a recent interview with "Weekend World", simply some kind of social phenomenon. It is the result of economic policy. The House has the choice of following policies which reduce taxes but do not create jobs or policies of public expenditure which create jobs. That argument has already been rehearsed to some extent in exchanges earlier today. I hope that we shall have a direct answer from the Government today as to why they do not embark on even a modest capital expenditure programme in both public works and industry, which the entire spectrum of opinion in this country not only recommends but urges on them. That is the very minimum that the Government can do, and it is the minimum that we expect of them.
The Government do not just blame their miseries on external events. A most unpleasant feature of their political technique is to blame those miseries on other people in this country. I have never known a Government more dedicated to the scapegoat theory of politics. At the beginning, they blamed the Labour Government for all our miseries. Then it was American interest rates. It is sometimes the international recession. It is always the trade unions. But it is never the Government. The latest

nonsense is that unemployment exists because trade unions will not accept wage cuts. As the Chancellor and others in the Government well know, wages in Britain are low compared with the rest of Europe. Indeed, we have a serious problem not just of unemployment but of low pay. In the past five years, real wages have risen by only 5 per cent. whereas relative production costs, which can erode our competitive position, have risen by more than 50 per cent. Before turning on the trade unions yet again, let the Chancellor consider the effect on jobs of high interest rates, the years of the grossly overvalued pound, the savage cuts in public spending and the lost spending power of the millions on the dole. Those are the real causes of unemployment, not some scapegoat to be found in the trade unions.
A new scapegoat theory is being fashioned at this very moment. It will be to blame our woes on the miners' strike. Before that theory gets fully under way, let it be remembered that the Chancellor himself told a stunned House of Commons that the strike was a substantial national investment. Moreover, throughout the entire eight months of the dispute no Minister has ever urged talks, pushed for a settlement or sought to mediate. The Government are quick to condemn and not a day goes by without their attempting to sharpen conflict. Do they not realise that British Governments have a responsibility to help settle and not to inflame industrial disputes? Even now a new phase could be started if the Secretary of State for Energy, the Secretary of State for Employment or indeed any Minister would invite the parties to seek settlement at talks inaugurated by the Government. The longer the dispute goes on, the greater will be the cost to us all. Already more money has been lost than all the so-called savings that the Government claim would result over the next 10 years if the pits earmarked for closure were closed. If the £2·5 billion spent in the course of the dispute had been invested in the industry the future of the industry could have been secured for decades to come. Therefore, we appeal once again to the Government to stop trying to break the strike and to start trying to settle it

Mr. Anthony Beaumont-Dark: Forgetting the miners, as I am sure that the right hon. and learned Gentleman would prefer, but before leaving the subject of trade unions and pay increases, will he apply his mind to the following question? British Leyland is still losing money, but workers there are on strike for a 22 per cent. increase, whereas those at General Motors in America have accepted 5 per cent. phased over three years, and that company is making a profit. Which company does he believe will prosper and who will cost jobs—the selfish union, the poor unemployed or the Government?

Mr. Smith: As the hon. Gentleman should know, the major difference between BL and General Motors is the far greater demand for the product in the United States due to policies which created demand and thus allowed companies to be successful. If the hon. Gentleman lectures the trade unions, I hope that he will urge others associated with some of his economic endeavours to make the same sacrifices as he recommends to the unions. Directors in British industry have had substantial increases in the past year. If they were prepared to accept the same restraints his advice might be more credible.
I shall no doubt be accused of being unfair to the Government and unduly pessimistic. We shall be told that things are on the mend and will soon be better. The notion that somehow things are about to get better has been put to us every year for the past four or five years. In 1981 the present Chancellor said:
We expect output to be on a rising trend during 1981–82".
On 25 June of that year the Prime Minister herself said:
There are now clear signs that the worst of the recession is over".
In November 1981 she said:
We are reaching the trough of the recession and it will start to turn up towards the end of next year".
In January 1982, the present Home Secretary, then a Treasury Minister, said:
We said in late 1980 that we were going to reach the low point of the recession in the spring last year: we did. We said in last year's Budget that we would then embark on a path of steady recovery: we have.
In March 1982, the Prime Minister claimed:
We are beginning to see the success that we knew our policies would produce … After nearly three years of battling, we are beginning to see the regeneration of our economy.
Worst of all, in his famous statement on 17 May 1982 the present Home Secretary stated:
The evidence of recovery is all about us. Not even the most blinkered pessimist could fail to see it.
After all that, the Government having been proved wrong in 1980, 1981 and 1982, why should anyone believe them in 1983? Even then, however, some trusting people listened to the Chancellor's claim in his speech to the Leicestershire Young Farmers Club on 2 December 1983, when he said:
I was lambasted for my 'optimism'. The bringer of good news is scarcely better treated than the bringer of bad.
But the critics must be beginning to worry.
For this week's seasonally adjusted figures were the third in the last four months to show a fall in adult unemployment. This is news which all should welcome …
In short, it looks as though unemployment is now levelling off …
The strategy is on course. We shall stick with it.
The price of our sticking with that policy has been 140,000 more unemployed since the Chancellor uttered those words.
The penny then began to drop, however, and there was a noticeable change between that speech and the Chancellor's words to the IMF on 25 September this year when at last it was gouged from a Minister that
The one outstanding worry is unemployment, which is not only far too high but continues to rise.
Some of us were greatly encouraged by the thought that the truth had finally penetrated, but the Chancellor then went on to describe his vision of the future in which Britain was turned into a trading post for other people's products — a series of Kentucky fried chicken franchises stretching from one end of the country to the other in which, he says, the future for our young people will not be in the jobs of the past and that those of the future will be
not so much low-tech as no-tech.
That is the Chancellor's vision for this country—not even low-tech but no-tech.
That is where we are now. There has been some recognition by the Government of the immensity of the problem, but they have not the faintest idea what to do about it. That is clear from the Queen's Speech. The Government are off on more diversions, more privatisation. What on earth has that to do with Britain's industrial recovery? It is utterly irrelevant to our economic

circumstances and it will be used more and more as an exercise in selling off the furniture to make the books balance. There are platitudes about competition and about freeing the labour market. That has little to do with the lack of demand in the economy. To free the labour market probably means to abolish wages councils and to remove protection. [HON. MEMBERS: "Hear, hear."] I am glad to note that that torpedo struck its target. It is not in the Gracious Speech, but Conservative Members will press for it to be included. The Government's prescription for curing our economy is to depress the wages and conditions of our poorest people. Worst of all, we await the ominous announcement about regional development policy. We fear that the Government will cut £10 billion from regional assistance during the next five years.
The Government do not know where they are going. Therefore we must urgently start a new debate about our industrial future and what will happen when our oil runs out. My fear, which is proclaimed by my right hon. and hon. Friends and which is even more widely shared, is that we shall face the non-oil 1990s with two problems in industry: outdated technology and a relatively unskilled work force. The time is now ripe for us to start a debate about Britain's new industrial policy.
The debate should be based on six pillars. The first is a new attitude to investment. The Government should be responsible for ensuring long-term investment on favourable terms for the key industries on which Britain will depend in the future. Secondly, we need a massive research and development programme related to the development of new products for the markets of the future so that we can lead, not trail, our competitors in new technology. Thirdly, we must launch the most expansive training and retraining programme in our history, instead of tinkering about with the youth training scheme. There must be a minimum of two year's education and training for all school leavers. That must be followed by extensive training and retraining throughout their working lives.
Fourthly, we must reshape the relationship between Government and industry so that the Government reinforce the efforts of industry to make new products, capture new markets and manage trade more effectively. Under the Government we have reached the appalling position in which we have a deficit in manufacturing trade for the first time in our industrial history. Recently I read a prediction that in the reasonably near future we may have a deficit of £1 billion in information technology products. That prediction was made by a bank, which is not known to favour my propositions specially.
Fifthly, we need a new approach to regional policy. We need to breathe new life into the proper distribution of industry and resources and to bring an end to the deadly divide between the prosperous south and the poverty-stricken north. Sixthly, we need to build a new partnership within industry. We must stop the constant sniping at the representative institutions of working people. We must start to build a new consensus within industry to achieve agreed targets, which are necessary for our industrial recovery.
I fear that that will not happen quickly. The Government have wasted our assets and squandered our opportunities. Nevertheless, it is not too late to begin the task of rebuilding our industry and economy. The Labour party in the House and especially next year when we launch our jobs and industry campaign will continually and relentlessly call the attention of the nation to that end.

The Secretary of State for Employment (Mr. Tom King): I welcome the right hon. and learned Member for Monklands, East (Mr. Smith) to his new position. I also commiserate with him—I do not know why he was moved. I thought that he was doing quite a good job. But setbacks happen to all of us at one time or another, and he will no doubt have another chance later. More seriously, I welcome him, in the absence of my right hon. Friend the Secretary of State for Trade and Industry, to his new position. I thank him on behalf of all Conservative Members for the gracious way in which he referred to my right hon. Friend. That was greatly appreciated. We echo the hope of the right hon. Member for Manchester, Gorton (Mr. Kaufman) that my right hon. Friend will be restored to rude health soon.
The right hon. and learned Gentleman was right to refer to industrial disputes, strikes, and the problems in the coal mining industry, and my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) to refer to disputes in the motor industry. It would have been encouraging for the House if the right hon. and learned Gentleman had shown a greater measure of leadership over how this damaging dispute could be settled. The Labour party is led by a right hon. Gentleman whose major contribution so far has been to say, "My diary is too full for me to make any specific comment on the matter". The part of the press report I enjoyed most was where it said that the position of the Leader of the Opposition was fully supported by the Shadow Cabinet. What on earth is that supposed to mean? Was the diary solemnly passed from hand to hand in the Shadow Cabinet so that they could all certify that it was a true and accurate record of the right hon. Gentleman's movements? Did he say, "Come on John, come on Roy, come on Denis, you can see that I am busy. I cannot be expected to go to those rallies"?
The right hon. and learned Gentleman mentioned the Chancellor of the Exchequer in a reference to the first world war. My hon. Friend the Parliamentary Under-Secretary of State for Employment, the hon. Member for Plymouth, Sutton (Mr. Clark), who is one of the greatest authorities on the first world war, pointed out that that was a frequent allusion. The Leader of the Opposition mentioned Gallipoli in connection with the president of the National Union of Mineworkers. I refer specifically to the phrase about his being the closest equivalent in the Labour movement to a first world war general. That obsession with the first world war will strike some chords with us.
The right hon. and learned Gentleman will be aware that in some ways the debate is a repeat of the debate we had about 10 days ago. He will recall some similarities. The Leicester Young Farmers' Club must be the best advertised in the business. The Leader of the Opposition mentioned it then, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) rehearsed it then and, indeed, I am mentioning it now. Therefore it is certainly getting full coverage.
I preferred some aspects of the right hon. and learned Gentleman's speech today to those speeches. He set out a programme which he sought for his party in this matter. His main contribution appeared to be to change the investment programme from £6 billion to £2·3 billion for infrastructure, even though he could not say what that would mean for jobs.
The right hon. and learned Gentleman was speaking well until he was asked about the state of the car industry. He said that it was all a question of demand. In an economic sense that was an illiterate response. It is not a question of demand. Demand is extremely encouraging. The problem is the capacity of British industry to compete with overseas suppliers and to win back demand. It would be better if, instead of 50 per cent. of demand in the car industry being met by overseas suppliers, we could move back to those heady days when overseas penetration was not more than about 10 or 12 per cent. That would be a happy improvement.
I shall leave the main burden of the right hon. and learned Gentleman's attack concerning the perils of the British economy to my hon. Friend the Minister of State, Department of Trade and Industry, who hopes to wind up. The House would expect me to deal with relevant measures that are foreshadowed in the autumn statement. In case there is any misunderstanding, I should make it clear that there is no question but that the prospect for more employment is based on a strong and expanding economy. Control of public expenditure, the confidence that grows from that, reductions in interest rates and in mortgage rates and the investment intentions of companies are the source of jobs.
The Government have long recognised that there are some specific ways in which to help the economy function better. We must ensure that we have the necessary skills to be able to respond quickly to changes in the labour market's demands and to help the unemployed have a better chance of work. Since 1979, we have developed a range of measures to improve training provision and to help the unemployed back to work. Now, 700,000 people are being helped under the various schemes on which expenditure has now risen fourfold since 1979 to well over £2 billion in the current financial year. The third part of the right hon. and learned Gentleman's programme insisted on two years' training. I recall that he was a member of the Labour Cabinet which refused to back Shirley Williams' desire to launch a modest equivalent of the successful youth training scheme that we have set in motion. His criticism in that respect is ill-received.
Developments in the training programmes represent a considerable achievement. The Manpower Services Commission has achieved much. It is appropriate for me to welcome, I hope on behalf of the whole House, the MSC's new chairman—Mr. Bryan Nicholson. [HON. MEMBERS: "What about Lord Young?"] Of course, I pay tribute to his work as chairman of the MSC. I know that my hon. Friend the Minister of State, Department of Employment, who has worked closely with him, welcomes his efforts. In case the right hon. and learned Gentleman suspects that there is some terrifying plot, perhaps I should say that I welcome the help and support of anyone who is prepared to work on the most difficult problem that faces any Government in the modern Western world—full employment.
I should like to announce further developments of the schemes for the coming year. Some will involve additional expenditure but there is one area in which I shall achieve some savings. It concerns the redundancy payments rebate. I intend to introduce an order that will reduce from 41 per cent. to 35 per cent. the proportion that the Government pay towards the statutory redundancy payment. That does not affect the amount that a redundant employee receives; it merely affects the balance between


the relative contributions of Government and employer. It is not unreasonable to make this change now, the more so as we have maintained the higher level throughout the time of heavy redundancies. The cost for industry will be small, especially when set against the substantial benefits that will accrue in the coming year from the abolition of the national insurance surcharge. As my right hon. Friend the Chancellor said, the full benefit of that is only just starting to be felt in industry. Further details of my proposal will be available in a press notice in the Library.
I shall now consider the areas of increased expenditure on training. It is clear that our more successful competitors such as Germany, the United States and Japan invest more in training than do we. In those countries the greater commitment to training comes not so much from Government as from employers, who devote more resources to training than do their British counterparts. In those countries, people expect and are expected to play a greater part in investment in their training. I am not trying to deny the Government's important role in the nation's training effort. We intend to continue to play a full part and to increase it. Our first priority has been the need to ensure that general vocational education and training should be readily available to help the transition from school to work and to cope with the changing needs of employment.
Our youth training scheme has made an excellent start. We guaranteed that every unemployed 16-year-old school leaver who wanted it would be offered a year of proper training and work experience. In the scheme's first year we secured that objective and met it for 17-year-olds as well. A small but vocal and unrepresentative minority, unfortunately including some Labour Members, set out from the start to belittle the scheme. They said that there would not be sufficient places to meet the guarantee. We have met that guarantee in full, with places to spare. They said that young people would not want to join the scheme. Last year, 350,000 youngsters proved them wrong. As compared with last year, still more young people have come forward to take part in the scheme. Perhaps most damaging of all, it was said that the scheme was a dead end and that there was no prospect of jobs at the end. Early results show that that was also incorrect. Our first results are only for Easter school leavers, but they show that nearly 60 per cent. of people who leave youth training scheme courses go straight into jobs and that a significant proportion of the remainder go into further training or education. The figures from several major schemes show that between 90 per cent. and 100 per cent. go into full-time jobs.

Mr. David Alton: Does the Secretary of State therefore dispute the figure given by Youth Aid, that 116,000 young people will leave YTS this year and not get a job?

Mr. King: I wish that I heard more often from Youth Aid what I would regard as figures and advice that support the scheme. I hope that the House shares my horror at the latest information which suggests that, as a result of some of the critics and some of the attempts to undermine the scheme, 20,000 youngsters went through the whole of last year without taking up available places because of the propaganda of some Labour Members. I am shocked that they wasted the year when traning was available to them. I hope that the right hon. and learned Member for Monklands, East shares my view.

Mr. Alton: How many will not get a job?

Mr. King: I do not want to bandy figures about. I have already said that 360,000 people went through the scheme, that about 60 per cent. appeared to go into jobs and that about 13 per cent. went into further education or training. That leaves 25 per cent. These are early figures and on a small sample. I believe that the figures will improve. I suspect that Youth Aid's figure is merely an extrapolation from those early figures, which were based on a sample of about 3,000 youngsters. I therefore do not endorse Youth Aid's figures. They should be treated with the same suspicion with which I treat its other communications.

Mr. Gordon Brown: rose—

Mr. King: I should like to make progress.
The youth training scheme is clearly establishing itself with employers. We shall continue to improve it by further developing and improving the quality of the training. I therefore propose to make no major changes but rather to consolidate on the excellent start and to improve the overall quality of the schemes. I propose only one minor change for the coming year—to extend eligibility to some 18-year-olds who might have been unable for some valid reason to join the scheme earlier. The Christmas guarantee will be repeated and, as in previous years, we expect to be able to provide for all unemployed 17-year-olds.
A number of initiatives have also been taken to develop links between education and employment. There is one particular new scheme which involves partnership—

Mr. Nicholas Budgen: In view of the interest of the House in wages councils, will my right hon. Friend tell us the Government's present attitude to them? We have heard that there is to be a review of them, and many right hon. and hon. Members believe that they continue to create unemployment.

Mr. King: I know that my hon. Friend listened carefully to what I said in our previous debate on this matter. I cannot add to that now, but I shall say a word or two at the end of my speech about further work to increase employment.
I was referring to the partnership between local education authorities and the Manpower Services Commission, and the scheme to which I wish to draw attention is the technical and vocational education initiative. The first 14 projects are already into their second year. Interest in and enthusiasm for the initiative has grown steadily since it was first announced by my right hon. Friend the Prime Minister two years ago. A second round of 48 projects, including five in Scotland, started this autumn. When the projects are all fully in operation, about 50,000 youngsters in 450 schools and colleges across the country will be taking part in what my right hon. Friend the Secretary of State for Education and Science and I regard as one of the most important developments of its kind for many years.
There was a good deal of disappointment amongst local education authorities whose proposals were not accepted for inclusion in the initiative this year, and therefore I am glad to be able to announce that the Government are making additional resources available to the Manpower Services Commission to allow local education authorities not currently participating a further opportunity to put


forward projects for the summer of 1985 or 1986. This will mean that every local education authority has the opportunity to join in this very important initiative.
Improving the skills of young people is a very important objective. It is vital also that we improve training opportunities for people throughout their working lives. In the White Paper on training for jobs earlier this year I announced a new adult training strategy.
We are about to launch a major campaign to bring home to everybody the significance of training as an investment for the future and the key role that employers must play in this. It is clear that attitudes will not change overnight and therefore this will be a sustained campaign over the next few years, involving all those concerned with adult training. I hope that I can look for support in all parts of the House in this initiative, which is very important for our future economic prosperity.
For their part the Government are taking a number of steps to encourage further developments in the training system. We shall be increasing the range and scope of the Open Tech programme, we are reorganising the Government's own adult training programmes, and we shall double to more than 250,000 the number of adults who will benefit from training by 1986–87. It will be built up progressively to that date. About half of those helped in this way will be unemployed people, including for the first time some 50,000 of the long-term unemployed on the community programme.
I am particularly anxious that we explore every possible option to increase the range scale of training. Earlier I mentioned the role that individuals could play. I am conscious of the number of individuals who may wish to undertake particular courses for which there is no existing provision and who cannot at the moment afford to finance it for themselves. Therefore, I have published today a consultative document setting out the Government's proposals for an experimental training loans scheme for adults, to be operated on the Government's behalf by the banks and other financial institutions. In the light of comments from interested parties, I hope that we can get such a scheme running next year.
This is not a substitute for the main training provisions, but it will be a useful additional facility for people who want to back their own judgment in courses which may fall outside the general range of training provision and enable us to see whether there is a way that we can help them to help themselves.

Mr. Ron Leighton: Earlier in his remarks the right hon. Gentleman said that we did less in terms of training than our competitors—Germany, the United States of America and Japan. He also said that the Government spent as much but that employers spent less. Does he regret the abolition of the industrial training boards? What is he doing to encourage employers to devote more resources to training?

Mr. King: I do not regret the abolition of the training boards. What we have to get is a voluntary commitment to the cause of training. It is in the long-term interests of the companies involved. German, American and Japanese companies do not do it for charitable purposes. They realise the benefits that flow from improving the skills of their work force. I have already appealed to right hon. and hon. Members to make their contribution in this area—

[Interruption.] If the hon. Member for St. Helens, North (Mr. Evans) will stop shouting, I hope that I can appeal to him to play some part in this as well.
In their contacts with trade unions, I hope that Opposition Members will also consider the problem of apprenticeships and the matters that I put before the House in the debate last week. I referred to the much improved prospects for apprenticeships in the electrical contracting industry because of the agreement between the trade union concerned and the employers to establish a more sensible first-year starting level, which has now resulted in a trebling of the number of apprenticeships in that industry.
I turn now to the range of special employment measures. The community programme offers 130,000 places to the long-term unemployed to do work of value to the community. Some 200,000 people had the opportunity to take part in community programme schemes last year, and it has clearly been a very successful undertaking. We now intend to build on that success by introducing, for the first time, linked training and preparation for work courses to help the long-term unemployed to have the best possible chance of getting back into jobs.
The voluntary projects programme also helps to prepare unemployed people for work by providing them with constructive voluntary activity. The voluntary sector has been very much involved in this. The programme was not originally planned to continue beyond this year, but I can now announce that we have decided to extend the programme to continue next year and subsequently.
I shall be asking the MSC, which administers the scheme, to develop new types of project involving a greater commitment of volunteers' time and projects which particularly help unemployed people, who may be considering the possibility of setting up in business on their own account.
The young workers' scheme has encouraged employers to employ more young people in full-time permanent jobs at rates of pay that reflect their age and inexperience. Currently there are 70,000 young people supported by this scheme. Its future was questioned, but I can confirm that it is to be continued for the next year.
We also have to recognise that more flexible patterns of working time in industry are essential if we are to remain competitive and provide employment. Therefore, I believe it essential to develop and encourage new and different approaches to patterns of working life. I intend to continue with two experiments—the part-time job release scheme, which enables those approaching retiring age to work part-time while freeing opportunities for unemployed persons, and the job-splitting scheme, which provides a grant to an employer who splits an existing full-time job into two part-time jobs. The take-up on both schemes has been disappointing so far, but I intend to make changes designed to improve their attractiveness and thus the help that they can give to reducing the problem of unemployment.

Mr. Douglas Hogg: I know that my right hon. Friend recognises the importance of helping those now out of work whose best chance of getting employment is as part-time workers or at the lower-paid end of the market. Does he agree that one of the measures that could most usefully be taken is to raise the lower limit for


national insurance contributions very substantially above the £35·50? He might persuade the Chancellor of the Exchequer to use part of his £1·5 billion for this purpose.

Mr. King: I am afraid that I have temporarily mislaid an interesting document entitled "Jobs Ahead" in which I know that a number of my right hon. and hon. Friends canvass this proposition. My hon. Friend will recall that in my speech at the end of our last debate I referred specifically to this area and the matters raised by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) and said that the Government were considering them.
Those two schemes are important for exploring the options that exist for changes in the patterns of work, both in job-splitting and in part-time job release. Therefore, I am anxious that we should help those experiments to become more effective. We shall also continue the full-time job release scheme on the present basis for a further year.

Mr. John Evans: Does the Secretary of State accept that the best way to increase the efficiency of the job release scheme would be to reduce the qualifying age of those who participate in the scheme? However, is that not the opposite of what he did a few months ago when he increased the age?

Mr. King: It is a bad habit of Governments to keep changing the age for the job release scheme. I think that the Labour Government changed it three times. If the hon. Gentleman looks at the problems he will discover that all the programmes have different costs. There are not limitless funds. One has to consider how best to use those funds. Therefore, I hope that the hon. Gentleman will listen to my next announcement.

Mrs. Elaine Kellett-Bowman: Will my right hon. Friend give us a little more information about the job-splitting proposal because it is one of the most imaginative and forward-looking proposals the Department has ever made?

Mr. King: I am proposing that we should pay an allowance to the employer to cover the extra costs involved. We shall increase that allowance. For part-time job release no allowance is paid to the employer for any additional costs involved. Therefore, I am introducing for the first time an allowance to help the employer with his costs. I hope that that will be helpful.
My next proposal concerns the enterprise allowance scheme. That scheme has fully justified our belief that many unemployed people, if given the chance, would try to start up for themselves. The House knows that demand for assistance under the scheme has been substantial. Since the national scheme was launched, 55,000 people have benefited. In July, I announced extra resources for the scheme to seek to meet the backlog of applications that was building up. The scheme is undoubtedly creating viable businesses and in turn creating more jobs.
The figures published by my Department during the summer show that six months after the allowance had stopped—18 months after the launch of the venture—seven out of 10 of the businesses supported were still trading, and for every 100 firms established over 50 additional new jobs were created. With those encouraging results, which are exceptional for the launch of such a new venture, we shall extend the scheme for next year. We are

allocating an extra £72 million next year and are making provision for the expenditure of £125 million and £128 million in subsequent years. That will enable the commission to increase the programme by 25 per cent. to provide for an intake of about 1,250 new entrants every week. That is for unemployed people. Where there was previously a blank in the programme this will now mean an opportunity for over 60,000 people to start up on their own from the ranks of the unemployed. I know that the House will want to welcome that warmly.
Those comments and announcements summarise the effects in my area of responsibility of the autumn statement. But I do not want the House to be under any illusions that this is the end of our approach to the deep-seated and difficult problems of unemployment. I have made clear to the House that we see unemployment as the most difficult and most serious problem facing the Government. I am pleased to have been able to have made certain announcements today that will help. I confirm, as I said previously, that further work is proceeding on a number of other approaches to the problem. To those who seek to chastise the Government, facing as we are the most difficult and modern scourge of unemployment, I give the assurance that we shall not rest until we see a real improvement for the British people.

Mr. Donald Stewart: I do not question the commitment of the Secretary of State for Employment to attempting to reduce unemployment—I believe that he is sincere in that aim — but the intention to do anything about unemployment is missing. Even in the United States, President Reagan has gone into severe deficit to improve the economic situation there. There should be some mild attempt by the Government to release funds for the improvement of the infrastructure even though it would add slightly to inflation. People, even some Conservative Members, are looking to the Government to do that.
The point has often been made in the House that many people need better homes and that unemployment among bricklayers, joiners, and so on, is great. We are continually asked—it may be a simplistic question—whether it is beyond the powers of Government to marry the need for homes with the need for work among people in the construction industry.
Once again, as has been increasingly the case in recent years, Scotland and Scottish legislation have been firmly relegated to the tail end of the Government's considerations. That trend has been evident since the Scottish National party representation was reduced in the 1970s, and consequently the political pressure of the Scottish people has been reduced. In the 1970s, Scottish issues, in particular the issue of self-government, were well to the fore in this political arena. That is not now the case. The simple reason is that the Government believe that Scotland does not count and that the opinions of the Scottish people do not matter.
The right hon. and learned Member for Monklands, East (Mr. Smith), dealing with North sea oil, as he calls it—I call it Scottish oil—said that historians of the future would wonder what use, if any, was made of it. He thought that there might have been an argument between the Left and the Right as to how the oil should be used, but historians will also want to ask why Scotland was the only country in which oil was discovered and which ended


up worse than it was before. Other countries where oil has been discovered have gained some development, some improvement, some economic advancement, but Scotland, alas, appears to have lost out.
There is nothing of relevance in the Gracious Speech to the severe problems faced by Scotland. We have heard that there will be no change in economic policy. Contrary to the propaganda efforts of the Secretary of State for Scotland, Scotland is not leading the way out of the recession and is not even recovering to any extent.
That view is not SNP propaganda, but is contained in the latest quarterly report of the Fraser of Allander Institute. I was disappointed to learn that there will be no change in the fortress Falklands policy. Almost £700 million has been spent this year on maintaining that policy. When people in Scotland ask what is happening to all the money from our oil, we tell them exactly where it is going. It has been spent on fortress Falklands, on the Trident missile programme and in keeping hundreds of thousands of Scots unemployed.
I contrast the cost of the Falklands policy with the position in other islands a good deal nearer to the British mainland—the Western Isles of Scotland. Members of its council are visiting London this week to lobby Scottish Members about the dire straits in which the islands find themselves as a result of Government policies.
The Western Isles islands council cannot even afford to spend up to the mean guideline laid down by the Secretary of State for Scotland and will have to cut essential services drastically. What about the principle of the "interests of the islanders being paramount" operating for the Western Isles?

Mr. Nicholas Baker: Is the right hon. Gentleman aware that oil has been discovered in the county of Dorset and that more oil is about to be discovered there, but that the inhabitants of that county have never suggested that the oil should be kept solely for the benefit of the people of Dorset?

Mr. Stewart: We would regard that as English oil. The oil that I was talking about was discovered in the Scottish sector of the North sea. That is the official designation of the oilfields; there are no fields south of the border. When there were gas fields off the coast of England, we paid 50 per cent. more for that gas than did the rest of the United Kingdom.
I deplore the absence in the Gracious Speech of any reference to the merchant service. The Government appear to be indifferent to the appalling way in which the size of the Merchant Navy has been decreasing over the past five years. If they do not worry about the employment or trading aspects, should they not at least show some anxiety about the defence aspect? It seems that they are not worried even about that. They simply say that the Merchant Navy must become more competitive. In a maritime nation, that is dangerous indifference.
I cannot see how the Chancellor of the Exchequer's removal of the tax allowance for seafarers will help the Merchant Navy to become more competitive. It will lead to demands for higher pay, which will lead to greater difficulty in meeting foreign competition, and thus add to the 30,000 seafarers from the British merchant marine who have been thrown on the dole in the past five years.
I welcome the sensible proposal to allow citizens on holiday to exercise their right to vote. I welcome also the intention to introduce a national prosecution service on the model of the procurators fiscal in Scotland, which is a long overdue protection for the citizen in England and Wales. I also welcome the Bill to improve occupational pension rights of people who leave schemes before reaching pensionable age. Those are all minor but worthy advances.
However, there is nothing in the Gracious Speech to foster any belief that the Government have learnt anything. Existing unemployment levels cannot go on for ever. The explosion point will come, and the doubts of many Conservative Members underline that fact.
Speaking about unemployment on Thursday last week, the hon. Member for Tayside, North (Mr. Walker) suggested that crofters in the Western Isles worked their crofts, yet claimed unemployment benefit. He said that they helped substantially to distort the Scottish unemployment figures. I wrote to the hon. Gentleman to tell him that I would comment on his remarks and I am sorry that he is not here. His speech demonstrated his ignorance of the position. Let him investigate the income from an average croft and take into account the fact that many crofters are weavers and, as self-employed people, do not appear in the unemployment records. Let him check on the number of crofters in the Scottish unemployment figures. I agree with one part of the hon. Gentleman's speech. He said that we should learn a lesson from Norway. The lesson is that the Norwegians had the sense to opt for independence for Norway.
Scotland faces the question of survival in more ways than one. We face it in an economic sense, a cultural sense and an institutional sense. No help will come from the Government and it is unlikely that help will come from this place. It is up to all Scottish Members to face the political realities that confront our people.

Sir Anthony Grant: The right hon. Member for Western Isles (Mr. Stewart) always speaks with great sincerity on Scottish matters, about which he knows a great deal. I wish to direct my remarks to the United Kingdom as a whole.
We can all agree that unemployment is an unmitigated evil and a major problem facing our society. I remember when unemployment reached 1 million in 1972. I was a Minister at the time and my right hon. Friend the present Secretary of State for Employment, who was assisting us admirably, will remember that the hon. Member for Bolsover (Mr. Skinner) came across the Floor and thumped the Government Dispatch Box in rage when unemployment reached 1 million.
I had some responsibility for regional policy, and that work confirmed my view that unemployment was very much a regional problem. By the time that I was unceremoniously ejected from office by an ungrateful electorate, unemployment had come down to 600,000. It took only two years for it to rise to 1·6 million while the right hon. Member for Blaenau Gwent (Mr. Foot) was Secretary of State for Employment. We do not need lessons on unemployment from the Labour party. Indeed, the fact that there are more than four times as many Conservative Back Benchers as Labour Members present for the debate demonstrates the seriousness with which we view the problem and the cavalier approach of the Opposition.
I greatly welcome the measures announced by my right hon. Friend the Secretary of State for Employment. I have some suggestions to make to him and one is that, bearing in mind the regional nature of unemployment, we must increase the mobility of labour. The lack of mobility has been a curse since the war. Our education system, to some extent, and our crazy housing system since 1918, to a great extent, have encouraged rigidity. People have stayed rooted in one area, and that has added to the unemployment problem.
My hon. Friend the Minister of State, Department of Trade and Industry is to reply to the debate and I wish to put some points to him. My right hon. Friend the Secretary of State for Employment said that industry had lost markets throughout the world. That is a fundamental factor in our comparative failure to take advantage of the move out of recession.
I make a plea to the Government that we should not be deluded into adopting protectionism, because that is a dangerous economic illusion. Other countries operate protectionism, but they are less vulnerable than we are. The idea that we can make our industry more efficient and dynamic and recapture markets by wrapping our firms in the cotton wool of protectionism is a dangerous delusion.
It is ironic that Labour Members plead loudly for aid for the Third world, yet immediately squawk when underdeveloped countries establish a textile industry and seek to sell their goods abroad and say that they must not be allowed to do so and that our industries must be cocooned in cotton wool against the barbarian hordes without. I do not believe that the Government will go down that path. Even the previous Labour Government set their face against it, but that does not seem to be the present policy of the Opposition.
During questions on the Chancellor of the Exchequer's statement today, I quoted—correctly, I thought—the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan). The right hon. Gentleman said that he thought that I had got the quotation wrong. I am the first to apologise if I make an error and for the sake of greater accuracy I quote what, as far as I can gather, the right hon. Gentleman said at Blackpool on 28 September 1976:
We used to think that you could just spend your way out of recession and increase employment by cutting taxes and boosting government borrowing. I tell you in all candour that that option no longer exists; and that in so far as it ever did exist, it worked by injecting inflation into the economy. And each time that has happened, the average level of unemployment has risen. Higher inflation followed by higher unemployment. That is the history of the last 20 years".
According to my records, that is what the right hon. Gentleman said, and there is much common sense in it. We, and above all the Opposition, should heed his words.
The right hon. Gentleman referred to taxation, but it is a matter of what one means by that. I happen to believe that if we are to get the economy going one particular policy should be pursued rather more vigorously than it has been. I refer to the need to spread the ownership of shares more widely throughout the country. About 20 years ago I and the late lamented Viscount Macmillan formed the constitution of the Wider Share Ownership Council. With great enthusiasm we advocated our cause, that every man should be a capitalist and so on, but very little progress was made as successive Chancellors of the Exchequer did not take it seriously. Today, only 7·5 per cent. of this country's adult population directly own shares, compared with about 25 per cent. in the United States. Perhaps that

is why the United States has been quicker than us to pull out of the recession and why it has been much more flexible.
I am sure that it would benefit our economy, industrial relations and society as a whole if we could spread the ownership of shares much more widely throughout the country. That means direct Government action. There will be another opportunity to go into the details, but it also requires our taxation system to be simpler and more intelligible for the savers and investors, the removal of the remaining disincentive effects of capital gains tax and capital transfer tax, the abolition of the ridiculous stamp duty on share transactions and the removal of restrictions on employee share schemes. We also need to encourage wider public interest in the selling of shares when public corporations are privatised.
That is why I very much hope that when the flotation of BT takes place those applying for a few shares—that may include me—will get the amount of shares they request almost in full. If there has to be any rationing, it should be at the top end. That applies to all privatisation schemes, because share ownership should be spread as widely as possible. The spread of share ownership is fundamental to democracy and to a free society. It increases the understanding of the economy and the responsibility of the individual within it. It is also a bulwark against the ever-encroaching tyranny of the state.
I hope that I am pushing at an open door when I say that the Government should encourage wider share ownership, press ahead with privatisation schemes and stimulate industry and enterprise, as that is the way that we shall secure a real and lasting improvement in employment.

Mr. Allen McKay: My only comment on the speech of the hon. Member for Cambridgeshire, South-West (Sir A. Grant) is that we should sometimes consider whether we need highly selective import controls. If the basic industries are to be rejuvenated, we must ensure that England does not become Europe's dumping ground. I know the problems and the fears, but there is some merit in the argument for selective import controls.
I shall concentrate on four issues: employment, or unemployment, both nationally and within my constituency, the abolition of the county councils, the proposal regarding bus services, and the mining dispute. When and if abolition of the county councils takes place their functions will be transferred to joint boards, joint committees, working groups, Government agencies or district councils—all of which will have to be funded somehow. According to the Government, the reason for change is that it will increase local accountability and save money, but it will not do so and the Government cannot have their bun and eat it.
There is a need to look closely at the Government's proposals. Indeed, I hope that the Government will scrap some of them. Research should be done, and an inquiry should be made to see what the physical and financial effects of the Government's proposals will be. Indeed, I well remember the fiasco of 1974.
We should look at local government as a whole. I do not say that there is no need for change, but that change should cover the whole of local government. I have always believed that there should be some form of return to the urban authorities, as they were accountable to the people


and were "local" government. It should be borne in mind that 70 per cent. of the expenditure of county councils goes towards the police, the fire service and public transport. If the councils are abolished, those functions will pass to the joint boards rather than to directly elected councils. That means that those services will be taken away from the local electorate, thus allowing less accountability.
What safety provisions will there be to ensure that those joint boards or Government bodies do not become selected boards, as happened with the water authorities? Indeed, there are far-reaching implications for the police service. At one time the water boards belonged to the authorities, but they are now responsible to the Secretary of State. If there is a joint board for the police that is responsible to the Secretary of State, it will bring us closer to the idea of a national police service. That is something that has been mentioned during the past 34 weeks and it should not be allowed to happen.
Centralisation will increase as the Government take the control of local government upon themselves, together with its budgets, rate and manpower levels. Unless services or personnel or both are to be drastically cut there will be no financial savings from the reorganisation. The Coopers and Lybrand study implied that there would not be savings but an increase in expenditure. If services are cut, the number of those employed by the council will also fall. Consequently, unemployment in the county town of Barnsley will increase.
In my area of south Yorkshire the possible loss of the cheap bus fare policy is of particular concern. Irrespective of any criticism of that policy, it is geared towards the area. There is a big divide between the north and the south. South of Mansfield the country alters. Indeed, the divide is becoming wider and wider. We have the lowest fares of any area within the British Isles. Senior citizens do not have to pay to travel on the buses. There are drastically reduced fares for children. There is also a service for the disabled which some of them use if they wish to go into town to shop. It is also used as a recreational service round the area.
In south Yorkshire people are asking whether those services will be retained or whether they will be lost with the abolition of the county council. The scheme is of critical importance to those in my area who are seeking work or who are in low-paid occupations. Indeed, many in my area are low paid. It is also important to families on low incomes and to those who live in rural areas. My constituency consists of about 120 square miles, much of it rural. How many objections have come from my constituents about the county's so-called high rates? Since 1978 the Secretary of State has received only one complaint about rates. So it would seem that the county councils' only sin was to be successful, and that is why they are being abolished.
Abolition of the county council will mean an increase in bus fares, but it is also proposed to abolish the national bus service. It is estimated that for Barnsley it will mean the loss of one third of its work force. This will do much harm to the cross-subsidy of road services and will be a further blow to areas in my constituency which already face the possible closure of post offices, telephone kiosks and schools. People in villages have to travel to work, go

into town to shop and see a doctor, and children have to go to school. The loss of bus services will gravely affect village areas.
The estimated cross-subsidy from the services that make a profit to the services that do not is about £1½ million. The Government propose to replace that with £20 million on a tapering basis over a number of years. The operators will compete for the most lucrative services and those that do not pay will be withdrawn. We shall have a reduced and less reliable service, much higher fares, more unemployment and reduced wages.
Any increase in fares or reduction in services will hit industry, particularly the mining industry in my area. The mining industry subsidises the bus services to the collieries. That assists miners to travel on buses, and car users receive payment based upon local bus fares. If local fares increase because of the abolition of the metropolitan counties and because the south Yorkshire cheap fares scheme is abandoned, the board will have to pay a higher cost. We could do without that.
The Prime Minister made four points about the mining dispute a few days ago. She should be corrected. She said:
In the debate on 31 July the Opposition urged the NCB to return to the colliery review procedure. The very next day the chairman of the NCB, Mr. MacGregor, made it clear in an official statement that the NCB had never departed from it."—[Official Report, 6 November 1984; Vol. 67, c. 22.]
It did depart from it. There is nothing more pointed than that, and it started the strike. The board departed from the review procedure. If it had not, the present dispute would not have begun. Two items prove that.

Mr. Gerald Howarth: Since the board has now accepted the review procedure, why does the strike continue?

Mr. McKay: The board has not accepted the review procedure. It has said that it will reconsider the future of the five collieries within the review procedure. The miners no longer trust the NCB. The men no longer trust the board to carry out its policies. They do not trust MacGregor, nor will they. It will take a long time for that trust to be built up again.
One of my constituents, Mr. Jack Fletcher, a mechanic at the colliery where I was employed as an electrician, said in a letter:
I should also mention, Allen, that when this strike started I was going to be transferred to Cortonwood colliery. That just shows how quickly they decided to close down the Cortonwood colliery. Men were going to be transferred right up to the day they announced the closure.
It takes six and a half months to complete the review procedure. The board cut across that because it wanted to close Cortonwood in three or four weeks. A pit should be the subject of a review before it is closed. The six and a half months scheme has stood the test of time and usually there have been no problems. A meeting is convened when problems arise. An investigation is conducted and four months' notice must be given. The Prime Minister was not right in what she said in her statement.
The Prime Minister also said:
for the first time ever the NCB, under Mr. MacGregor, has said that any miner wishing to remain a miner will be able to do so.
That is a lie because in the 1970s I was recruiting in Jarrow. It was said then that every miner wishing to remain a miner would be able to do so. This is not new. We have said that for years when recruiting. The Prime Minister said that the NCB were


providing the most generous early retirement terms ever."—[Official Report, 6 November 1984; Vol. 67, c. 22]
That is fair enough. They are generous, but they are for only a select few. They are for the miners who are at the right age at the right time with the right service. The maximum redundancy is £30,000, or about four years' wages. The miners have to spend that before they can collect social security benefit.

Mr. Patrick Nicholls: Is not the maximum payment on the present scale £36,480 for a 49-year-old man with the maximum years of service?

Mr. McKay: We are still talking about only four or five years' wages. What happens after the man has spent that money? That is the basic problem. There have been other generous schemes, such as that in the shipbuilding industry, but the fact remains that such an amount does not compensate the miners for the jobs for which they are fighting.
It is claimed that any miner wishing to remain a miner can do so. At one time, when one colliery was closed the men were moved next door. Since then the NCB has reduced the number of collieries and the average age of miners has dropped from 60 to 54. The jobs are no longer available. A miner must now take a job in a colliery far away from his original place of work. What happens if the miner cannot sell his home? What arrangements are made for the education of his children? What decisions are made about work for the rest of the family? Closing a colliery should not be a mere three-week operation. It must take at least 12 months to make arrangements for the closure.
The Prime Minister said that management should always manage. That is so, has always been so and will be so. However, management in the coal industry is different from management elsewhere. It is management by consensus and always has been. People say, "What shall we do? How shall we get rid of the problem?" The problem is Ian MacGregor. Other more capable people are available to take on the industry. I think of people such as Mike Eaton, John Kiers, Albert Tuke and Ken Moses. The four together could take on the industry and bring it back to what it was; to what it should be.
Barnsley council has produced a report about the mining industry in the area. It has set out exactly what it is, how it has run down and what it means to the area. I draw the Minister's attention to some of the significant factors in that report. The mining industry is still the largest employer in that area. In 1978–79, 49 mining apprentices, 40 mechanical and 42 electrical apprentices were appointed in the Barnsley area. In 1983–84 63 mining apprentices, no mechanical, no electrical and no surveying apprentices were taken on. There is no youth employment in the industry today. That is a problem. The miners know that if a colliery closes, no jobs are available.
The stand-by steel industry has gone. Forgemasters is running into trouble and it is ironic that BSC money is keeping it going. All these matters must be considered when we are trying to solve the unemployment problems and the mining dispute.
We have debated the mining industry's problems many times in the last 34 weeks. Hon. Members on both sides spent a long time talking about the effects of the mining dispute. It is time we discussed the causes. When we do that, we can resolve the dispute.

Mr. Peter Hordern: The Queen's Speech and the statement of my right hon. Friend the Chancellor of the Exchequer this afternoon both demonstrated that the Government are sticking to their course in controlling inflation, bringing down prices, increasing competition and, through those measures, hoping to price people into jobs. The Queen's Speech mentioned further privatisation, which will also be helpful.
I wonder whether the House detected, as I did. that my right hon. Friend's speech gave very much the same sort of information and showed very much the same motive—a long, technical exposition about interest rates and the course of the economy during the next year — as have previous statements, as though ours was a free enterprise economy which would respond readily and quickly to any change in interest rates; as though it were a perfect economic model. Our economy is not like that. We have very different levels of employment, very different levels of economic activity and different political representation.
My right hon. Friend the Chancellor referred to the benefits of sound money, with which I entirely agree. The House will know that I have always been a sound money man, and I am not likely to change now. My right hon. Friend said that the virtue of sound money and a competitive sterling exchange rate against the dollar should price our products into the market, especially the United States markets. We must think about that carefully. Our industry is not in anything like the same state as it was a few years ago, and therefore cannot take the same advantage of any opportunities offered by the exchange rate of sterling against the dollar.
There may be some dispute about how well our industry is placed. The manufacturing production index shows a figure for 1979 of 109·3, but only 96·8 at present. That is about a 15 per cent. drop in manufacturing capacity. When and if orders come from the United States, and if our manufacturers can fill them, will the capacity be available?

Mr. Christopher Hawkins: With respect to my hon. Friend, the figures show, not a drop in capacity, but a drop in output.

Mr. Hordern: I am grateful to my hon. Friend for his intervention. I wish that I could believe, as he plainly does, that our productive capacity has not been affected in the same way as our manufacturing output. We all know from our constituencies of the rundown of manufacturing capacity.
The Department of Trade and Industry figures show that more and more imports are used in our consumption of important manufactured products. There are numerous examples of that, such as cotton, silk and man-made fibres. Britain has become less competitive in manufactured products at a time when our productivity has been improving. My right hon. Friend has rightly taken credit for the significant improvement in productivity in manufacturing industry during recent years, yet recently wages in manufacturing industry have been rising faster than in the past and productivity has not been doing as well. It is not a sudden deterioration. Our manufacturing production has been declining as a proportion of gross national product for many years.
It would be possible to use those statistics and portray a picture of a country in decline, yet that would not be the


true position. Although our manufacturing capacity has declined, other measurements of our economy show that matters are progressing rather well. For example, company profits rose by 23 per cent. last year and are already up by 20 per cent. this year—an increase of 43 per cent. in under two years. It would be hard to find a similar period when company profits had increased at such a fast rate in such a short time. My right hon. Friend the Chancellor was correct to say that the increased profits are being used for manufacturing and other investment, and that such investment is higher than at any time since the 1960s.
What sort of investment is being made? I believe that it is used for labour-saving machinery. Those machines pay no national insurance contributions, they obey no employment laws, they are there to be used — and increasingly so — with greater efficiency than ever before. It is a strange position. By all past orthodox economic yardsticks, an improvement in company profits would have led to a large increase in employment. That was always the position in the 1950s and 1960s. However, a large increase in investment now does not mean an improvement in the level of employment.
During the past 20 years employment in manufacturing industry has fallen by 3 million, while there has been a doubling of employment in professional and scientific services, investment and banking. We are now told that the new revolution in information technology will mean that the additional employment in insurance, banking and other services will be threatened.
We are seeing something quite new, and we are unlikely to have any repetition of past trends in the near future.

Mr. Andrew Rowe: Has my hon. Friend seen the article in the Employment Gazette recently, which suggested that one glimmer of hope in the rather gloomy scene was the fact that the very expensive machinery was required to be used for five or six shifts at a time, so that the possibility of increasing employment did exist?

Mr. Hordern: I have not seen that article, but I shall certainly ensure that I do. I fear that the figures show that the employment of such machinery, even if it does not replace people, makes additional employment unlikely.
What can the Government do about the problem? Although there is competition in the private sector, there is little in the public sector. I think that the way that we look at expenditure and revenue is antiquated and should be changed. My right hon. Friend the Chancellor did what his predecessors did. He delivered his autumn statement, and in February he will produce his public expenditure White Paper. Why cannot both expenditure and revenue be considered together, and why cannot public expenditure be considered, not only in relation to the submissions of each Department, but in the expenditure of that Department's relativity to unemployment?
One hopeful sign is that unemployment has been falling in America for some time. Fifteen million new jobs have been created during the past 10 years. I believe that the reasons for that improvement also apply to Britain. I want to contrast the experience of the United States with Liverpool, which I had the honour to visit just over a week ago. I thought that I should visit the city as I had been asked to write an article on unemployment. I did not feel

that I could do so in the context of unemployment in my constituency, which has the lowest level in the country. Driving for three hours from London to Liverpool on the motorway is an experience—I mean this in no damaging or insulting sense—that is rather like travelling from west Berlin to east Berlin. In Liverpool there are large areas of desolation, of broken down flats, vandalised buildings and an atmosphere of very little hope.
My right hon. Friend the Chancellor of the Exchequer refers to reducing interest rates and his hopes for lower unemployment. He is talking about the free enterprise economy which flourishes in London and the south-east. The same terms do not apply in places such as Liverpool. They do not know what private enterprise is. The only place where private enterprise can be seen in Liverpool is under the railway arches. That is where business is done and where little rent is paid. That is where the willing buyer meets the willing seller in Liverpool.

Mr. Alton: The hon. Gentleman should reconsider some of his remarks. I acknowledge that there are some problems of major proportions in Liverpool, and some of them, undoubtedly, have been caused by the reduction of £140 million in the rate support grant over the past five years and by militant extremism in the city. However, about four fifths of the people of Liverpool are employed. There are many successful businesses and it does no service to members of the chamber of commerce in the city, or to successful employers, to give the city the bad name which the hon. Gentleman has implied.

Mr. Hordern: I am not attempting to give Liverpool a bad name. I am merely stating what I perceive to be the truth, having compared Liverpool with other parts of the country. If the hon. Gentleman considers that Liverpool is not in difficult straits when 86,000 people in the city are receiving supplementary benefit, he should think again.
How are these difficulties dealt with in America? If a person loses his job in New York state, he can go to Texas and find a job easily, because he is able to find somewhere to live straight away. If a person loses his job in Liverpool and moves to London or the south-east, he will not be able to find anywhere to live. The reason for that is the Rent Act. It is high time that we considered again whether we should have that sort of rent legislation.

Dr. Oonagh McDonald: rose—

Mr. Hordern: The hon. Lady must forgive me for not allowing her to intervene. I do not want to detain the House for too long.
The wages councils have been referred to already and I shall be interested to hear what my right hon. Friend the Secretary of State for Employment has to say about them. In the United States there are no such things as wages councils. That is something that we should consider.
In New York state it is possible to buy industrial land on the Canadian border for $7,000. The local authorities in Britain have development land and there are 48,000 acres that are ready for development. Why is the land not being sold and brought into use at the best price that can be obtained for it? My hon. Friend the Minister of State is partly responsible for the regional assistance programme. We spend £640 million on regional assistance and we have been providing this form of assistance for a long time. There have been frequent departmental reviews, and when the Department of Employment last


appeared before the Public Accounts Committee on this issue its representatives explained that they were unable to determine whether regional aid did any good. What is their response? They have initiated another examination of regional aid. I understand that the results will be announced later this month. I have no doubt that regional aid will continue. It will probably be more selective, but why is it made available at all if it is not bringing in any jobs?

Mr. Anthony Steen: Does my hon. Friend agree that regional aid distorts the market economy and creates jobs in places where manufacturing industry and service industry do not want to set up plants? As soon as the economy goes into reverse and there is a depression, the first places from which industries pull out are those where plants were established by regional aid in the first place.

Mr. Hordern: I agree with my hon. Friend, but I wish to develop my remarks. The Government should consider reviewing regional grants with a view to abolishing them. It is essential to reduce the cost of work in the regions. If the Government were to abolish employers national insurance contributions in the regions and to introduce a nil rate of corporation tax for firms operating within the regions, thus reducing the cost of work in those areas, I suggest with all humility that better results would flow, as in the United States. In New York state industry is offered interest rates in the form of tax-exempt bonds that run at 7½ per cent. for 20 years. That form of special development scheme should be considered. I do not suggest that the New York scheme is perfect, and I have no doubt that there are snags, but I am sure that it is no good treating the country as if it is one economic unit and throwing money away in areas that are not conforming to the pattern that the Chancellor has set for them. We must reduce directly the cost of work.
Where is the money to come from? I know that some of my hon. Friends are cereal farmers, or represent them, but I cannot understand why we should give cereal farmers a penny. If my right hon. Friend the Minister of Agriculture, Fisheries and Food were to go to the Council of Ministers in Brussels and shake his head sadly from side to side, we would save £1,250 million. It is my contention that regional grants should be abolished, which would save more than £600 million.
I am sure that the way ahead lies in reducing the cost of work in the regions rather than throwing money at them. I see no reason why Liverpool and other cities should not be attractive again. If new technological industries in communications, for example, can flourish anywhere in the country, there is no reason why the country as a whole should not make higher profits. That can happen if the movement of people is free and if the price of work reflects local conditions. My right hon. Friend the Chancellor of the Exchequer says that unemployment is not an economic problem. Indeed, he says that it is a social problem. I say to him that if different methods are used we shall have, not an economic problem, but an economic opportunity.

Mr. Ian Wrigglesworth: The hon. Member for Horsham (Mr. Hordern) has told the House some home truths. We may not agree with them all—I am certain that his right hon. and hon. Friends will not

agree with them all—but I want to congratulate him on presenting us with them and to say that I agree with some of his remarks. I agree especially with his suggestion that we should reduce the cost of employment. I hope that the Government will consider that in terms of regional policy, in which it could make a considerable contribution, arid across a much broader spectrum. The hon. Gentleman will probably know that my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen), the leader of the Social Democratic party, has made a number of similar proposals in recent weeks.
I would like to associate myself with the remarks of the right hon. and learned Member for Monklands, East (Mr. Smith), who spoke from the Opposition Dispatch. Box, in regretting the absence from the debate of the Secretary of State for Trade and Industry, the right hon. Member for Chingford (Mr. Tebbit). I associate myself and my colleagues with the sentiments expressed by the right hon. and learned Gentleman. We miss the right hon. Gentleman a great deal in the House and I am sure that the House wishes him a speedy recovery. I think that I speak for many hon. Members when I say that we also wish his wife a speedy recovery. We in this place often have great pleasure in holding offices and we drag our families into them. They have to put up with a great deal. Our hearts went out to the right hon. Gentleman's wife and we hope that she, too, will return speedily to full health.
I suspect that the debate and the Chancellor of the Exchequer's statement earlier in the afternoon will be seen in the public eye in the context of the abolition of the pound note and the halfpenny. I can guess what the headlines this evening and tomorrow morning will be. The Chancellor's announcement may have a certain symbolism about it in the context of the Government's record.
I do not want to go down that track because I shall begin—I wish it would happen more often from Opposition Benches—by congratulating the Government on their record on inflation over the past few years. That achievement should be recognised. The Chancellor referred to remarks made by the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan), who is a former Prime Minister, and remarks have been made by the right hon. Member for Leeds, East (Mr. Healey) and by my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins), both of whom have been Chancellors of the Exchequer. They have all spoken about the evils of inflation and the damage that it does to the economy. Therefore, we should recognise, as I think that the country does, the Government's success in getting and keeping inflation down.
However, the country is getting to the point where it is saying, "Yes, you have achieved a lower level of inflation, but for what?" It is no good just achieving low single figures of inflation unless the Government have following through from that the growth in output and employment opportunities that everyone wants to see. It has been increasingly recognised that on that score the Government have failed. It is no good, as both this Chancellor and the previous Chancellor have done, blaming past Governments for the high unemployment rates. Amazingly, contradicting that line, the Chancellor is now saying that unemployment is caused by the success of the Government's policy.
The right hon. and learned Member for Monklands, East (Mr. Smith) read out in his speech the forecast, made by the former Chancellor, this Chancellor and the Prime


Minister, of the recovery that was just round the corner. The country wants to see that coming about in terms of employment opportunities for many more people, particularly in the regions.
I welcome in the Queen's Speech the proposed insolvency legislation. This has a bearing on employment. Our insolvency legislation has long been out of date and damaging to many enterprises. All hon. Members will be aware of the devastating impact that the collapse of a business can have on other businesses, and particularly on small business. The Cork report was published a long time ago, and this legislation is overdue and should be welcomed.
Many people have been ruined as a result of other businesses going bankrupt, and we need legislation along the lines of the Cork report to help to keep businesses afloat and to put an administrator in long before it is possible to do so under present legislation. We should ensure, too, that the interests of small creditors are protected and that some of the rogues who have been operating in this sector and making a business out of going bankrupt are stopped. A tremendous amount can be done to help businesses. Bankruptcies have been going on at a rate of 1,500 a month, and there has been a devastating impact on other businesses. I welcome the legislation, and I am sure that the House will want to speed it through, although no doubt we shall have to look at some parts of it critically.
The country is becoming increasingly impatient with the Government's failure to succeed in the objectives that they have set themselves over the past five years. Output is only half a percentage point above what it was in 1979. We have lost 1·5 million manufacturing jobs in five years, a figure that is equivalent to the previous 20 years' loss in manufacturing employment, and manufacturing output is still 11 per cent. below that of 1979. The manufacturing trade deficit, as the House will know, for the first time went into the red, reaching a staggering figure of £5 billion in 1983. This is a dreadful record, to which the hon. Member for Horsham referred. It will be difficult for the country to recover from it.
In my constituency we have the highest level of unemployment of any county in the United Kingdom excluding the area represented by the right hon. Member for Western Isles (Mr. Stewart). The industrial devastation that has taken place recently makes one realise that even if demand came at a rapid rate of knots we should simply not be able to respond in many sectors of our business. That is why we have not suggested that there should be an enormous expansion of demand within the economy, as some in the Labour party have suggested. We do not believe that the economy is able to absorb that demand.
Above all, we need to increase the competitiveness of our industries and services. Although the Government have paid lip-service to this, they have done little about it. The Queen's Speech illustrates this point clearly. We have the quite bogus claim, which illustrates the Government's sensitivity on this matter, that the legislation being brought in to change the status of the Trustee Savings o Banks is part of the Government's programme to increase competitiveness in banking.
I was on the Committee which considered legislation on the Trustee Savings Banks and I am a member of the parliamentary committee of the Trustee Savings Banks. I

have been involved in banking for much of my working life, and as anybody who knows that sector will know, the introduction of this legislation has nothing to do with competition. The legislation is needed because the legal status of the Trustee Savings Banks was left unclear by previous legislation and it has to be rectified. The legislation will not change the competitive position of banking one iota. The Trustee Savings Banks have already had their status changed and are competing on all squares with the other clearing banks in a way that I welcome, as do consumers.
This claim is symbolic of the Government's bogus attitude to competition. They constantly confuse the provisions which they introduce for privatisation with increasing competition. Bringing about the privatisation of a public corporation does not necessarily increase competition. The coming privatisation of British Telecom and of British Airways has not increased competition. Competition has been increased as a result of welcome liberalisation measures which were brought in some time before the privatisation proposals were introduced.
What is worse is that those two substantial public corporations are not being made more competitive, but are being changed from public monopolies into private monopolies. It will be much more difficult to control those monopolies, particularly BT, which has a minute regulatory office in the new establishment which has been set up under Professor Carsberg to control that vast industry, in which BT itself controls 93 per cent. of the market for telecommunications. That is not increasing competition.
In the Queen's Speech, I should have liked to see much clearer proposals for the Government's competition policy. I should have liked that policy to outline in detail what the Government are hoping to achieve, and what they see as the role of the Monopolies and Mergers Commission and of the Office of Fair Trading. Under successive Secretaries of State, it has been unclear what the Government's policy aims at achieving. We should like a much more aggressive competition policy than the Government are pursuing. I hope that the Minister will make it clear that the Government intend to clarify the role of the Monopolies and Mergers Commission and the Office of Fair Trading, and that they will make those bodies much more effective in busting up monopolies and oligopolies, which are to the detriment of the consumer and are destroying jobs by not increasing the competitiveness of British industry.
As part of their efforts to increase the competitiveness of industry, the Government must take many more steps in education and training. I have said in the House previously that the Government took enormous strides forward when they introduced the youth training scheme. It was an enormous achievement for the Department of Employment to get the money out of the Treasury. The Secretary of State referred to the attempts of the president of the SDP, when she was Secretary of State, to set up similar schemes. She was unable to do so because there were legitimate arguments about public expenditure at the time, just as there are now.
Although the Government started a youth training scheme, they have stunted it. I hope that the Secretary of State will be much more forthcoming than he was today about the development of that scheme. Many of us—there is a broad spectrum of opinion on this—want the scheme to be broadened and lengthened so that it fits in


more with the education and training available in other institutions, especially in higher and further education. It is no good receiving a piece of paper at the end of a year's youth training if that paper is of no value in taking further examinations so as to gain more opportunities for employment. It is important that the scheme forms the basis of a comprehensive training and education system, which Britain has needed for a long time.
It is becoming increasingly apparent that there is an overwhelming case for bringing the work of the Manpower Services Commission much closer to the work of local education authorities and the Department of Education and Science. In many constituencies, although the MSC has made noble attempts and done sterling work, it has had thrust upon it enormous responsibilities in a short period. Anyone who has been involved in training will know those responsibilities and the resources that it has been given to do the job. As a result, we are building a dual-track training system. We still have some industrial training boards, further education colleges and the good training and vocational initiatives which the Government have introduced in schools. Those developments are not coordinated as they should be. There is an overwhelming case for bringing them together into a comprehensive training and education system, and removing — I am sorry to tell the Secretary of State this—the MSC from the responsibilities of this Department and putting it under the Department of Education and Science.
Another area in which I hope the Government will take further steps to improve our competitiveness is industrial relations. I shall not discuss the miners' dispute, because we have made our views known in the House and elsewhere. The sooner that miners vote with their feet and get back to work, the better it will be for them and for the country. All that I would say about recent events is that the British Leyland dispute illustrates how right some of us were, when the trade union legislation was discussed by the House last Session, to have pointed out that the Bill would be a charter for unofficial action. I hope that the Government will reconsider quickly the Bill that we passed last Session. The AUEW has not made the British Leyland dispute official and has, therefore, avoided the legislation. We forecast that that would happen and that unofficial action, which represents most of the action taken in this country, would not be covered by the legislation. If industrial action is taken, it is vital that proper ballots are held.
The Government should also redress their attitudes towards worker participation and industrial democracy. They are sticking their head in the sand by constantly resisting the fifth directive and the Vredeling directive from Europe, which are now modest measures as a result of the amendments introduced by Mr. Ivor Richard. I wish that the Government and some members of the CBI would realise that the proposals contained therein are not an impediment to efficiency but are a means of getting the full backing of the work force and overcoming the industrial disputes that have damaged British industry for many years.

Mr. Beaumont-Dark: Cant.

Mr. Wrigglesworth: The hon. Gentleman says, "Cant", but all that he need do is to consider some of our major competitors, who have beaten the pants off British industry. They operate systems of industrial and worker

participation, which many of the major private British industries, including some with which I have been associated, already operate. Unfortunately, not enough of them are doing so, and we need legislation and those directives to ensure that a change takes place. It would enormously enhance the competitiveness of British industry, and that is why we support it.
Although the extension of the schemes that the Secretary of State announced this afternoon is welcome, many of them are increasingly perceived by the young as palliatives. They do not take the schemes seriously because there are no jobs at the end of the training period, which is a dreadful development. They lose all faith in the relevance of those schemes to their future lives. If the Government do not reverse their economic policies and begin to expand demand steadily, for which there is broad support in the country, the money that they are pouring into the schemes will go down the drain, because youngsters do not consider them relevant to their lives or as providing them with employment opportunities.

Mr. Kenneth Warren: Following what the hon. Member for Stockton, South (Mr. Wrigglesworth) said about how our hearts and thoughts go out to my right hon. Friend the Secretary of State for Trade and Industry and his wife, the House will be pleased to know that, in reply to a letter from the Select Committee on Trade and Industry, I received a handwritten note from my right hon. Friend recording that both he and his wife are making good progress.
The Queen's Speech is always an equation between what we can do and what we say we cannot do. I commend to the Government the suggestion that, after four years of fairly good progress, we should move forward to a combination of what we can do and what we must do. The problem is one of national attitude compared with that of our competitors. Often in our industrial society we are driven reluctantly forward against the wall of what we cannot do, whereas our rivals, especially the United States and Japan, are distinctly "can do" societies. That is important, because even with a non-interventionist Government — I am not much of an interventionist myself—there are inevitable partnerships in which they must playa part. The time has come for the Government to focus as much attention on the creation of wealth as they have focused on how we should spend that wealth by their taxation policies.
The Government have achieved very good progress over the past five years. I was delighted to hear the hon. Member for Stockton, South acknowledge that, particularly the progress on reducing inflation. However, there are big problems. Unemployment, as the leading one, has reached crisis proportions, particularly with regard to the talent that we are now wasting. I commend particularly to the Department of Trade and Industry a bit more optimism and confidence that, in partnership with industry, it can conquer the problems. It has a duty to retain and encourage that partnership so that the problems can be conquered.
I declare an interest as an engineer and industrialist. I commend to the Government the basic tenet of engineers, which is that problems are there to be solved, not to be talked about. The paramount question that the Government must face and resolve is their own position and the power that they can and should exercise to play


their essential part in conquering unemployment. The Government may not wish to be an active investor of taxpayers' earnings, even in enterprises responsible to Government. I recognise that when such enterprises escape into private ownership, they are doing exactly what the Conservative party wants. However, many others still remain — those involved in energy production and supply, transport production and supply, and steel, for a while perhaps. I plead with the Government to recognise that the public sector borrowing requirement is a constraint that is affecting the competitiveness and profitability of some of those state companies. I ask them to look at the constraints being practised, which are limiting production and profits.
At the same time, there are many things that the Government can do without expenditure to increase wealth and employment. The first involves the hurdy-gurdy of public purchasing. I ask the Treasury to get to grips with that problem and to recognise that in many public purchasing ventures—for instance the 10,000 computers that the Ministry of Defence now has on order—there is much merit in examining the value of buying British. In many advanced technology products, the labour content is about 50 per cent. of the whole value, and of that some 40 per cent. is recycled as tax and national insurance. Therefore in the end one could even overprice a British bid by 20 per cent. and still spend no more than if one imported the product. If one said that British industry would take advantage of that, the answer is simple. Those engaged in Government purchasing should get in some better buyers. They would know when the pants had been taken off the Government. A bit of incentive in improving public purchasing standards is long overdue.
That also applies to infrastructure and various capital projects. The Government should look more broadly at the value of investment in capital expenditure, for instance the way in which the very presence of the M4 has created a silicon valley in the south and the M25 is already affecting employment and business opportunities in the London area. I hope therefore that the Government will look not Department by Department but across Departments at the way in which wise investment can, pretty cheaply, create much more employment than by direct investment through regional assistance.
When I consider the creation of new businesses, I am conscious of the tremendous amount of work that has been done by Ministers in the Department of Trade and Industry, and I compliment them on it. However, could they also look at the problems of setting up businesses? If one wants to create a new business, there are 14 separate steps, 12 involving Government agencies. If one wants to employ someone, there is a minimum of 23 separate steps with which one must comply. In that cat's cradle, there is much that Government can do to untangle their own rules and regulations to make the creation of business employment much simpler.
I should like to give an example. A constituent of mine managed to get a Government loan backed by a bank loan and went through all the steps required, but as soon as the district council heard that he was in business it cracked down on the rates and put him back on the dole. Therefore there must be unity not just between Departments in Government, but the district councils—

Mr. John Prescott: Was it a Tory council?

Mr. Warren: The district councils have their own part to play. The hon. Gentleman can make his own speech if he withdraws to his empty Back Benches.
I should like to refer to the Government as a sponsor. It is difficult for individual industrial companies to criticise Governments when so often they are the biggest single customer that they have, either directly or indirectly. What one hears nowadays strongly and stridently from trade associations such as the United Kingdom Information Technology Organisation, set up with the blessing of the Department of Trade and Industry, the Electronic Engineering Association and the Society of British Aerospace Companies is that they find that the Government are not carrying out their part of the partnership through the sponsorship that they need to make progress in their own product areas. Those are not just small operations. In the aerospace industry alone, there are companies in over 330 constituencies.
Therefore, the criticisms from the trade associations and the Council of Engineering Institutions about the failure to link the requirements identified by the Department of Trade and Industry in its excellent information technology programme and the output that is planned by the Department of Education and Science show that there is a real problem facing the growth of British industry. The boom year in computing was 1978, but there are now more job vacancies than there were then, with fewer people to fill them. Vacancies in computing for qualified scientists and engineers—not just technicians or production workers—are estimated at 30,000, with no sign of abatement. In fact, the figure is more likely to increase.
Therefore, I ask the Department of Trade and Industry to establish a practical liaison with the Department of Education and Science to recognise the problem as it is and to find out what can be done to solve it quickly. I should like to illustrate the essence of the problem. It is not just that jobs cannot be filled now but the way in which we are watching competitiveness begin to evaporate from engineering in this country compared with our principal competitors.
The science policy unit at Sussex university—I am privileged to be on its court—has just published some interesting data on the way in which basic science standards in this country, on which we pride ourselves, are falling behind those of our principal competitors. If one tries to establish measurements in that area, one always has to make qualifications, but one or two are worth looking at. If one wants to make progress in industry and exports, one must be able to compete in the United States of America. Therefore, one must register a patent in the United States. In the past 10 years West Germany has registered about 25 per cent. of foreign patents in the United States, but we have dropped down from 20 per cent. to 8 per cent. The Japanese have increased their total from 8 per cent. to 35 per cent. In other words, the Japanese are registering four times as many patents when we have cut ours by half.
Once the patent is out, one presents a scientific paper so that one can shout about one's goods from the rooftops and begin to get entrepreneurs to come to one. We used to have about the largest single share outside the United States. Over the past 10 years the number of papers that


we have presented has gone down by about 10 per cent. but the number of Japanese papers has risen by 30 per cent. The number of times that other people refer to our papers has gone down by about the same amount but, significantly, the Japanese figure has risen by about 50 per cent.
Those may seem dry statistics, but they are the essence of the creativity of engineering and industry and its ability to get into the markets in the 1990s. The United Kingdom weaknesses listed in the data are frightening. Our present weaknesses are clinical medicine, general engineering, general chemistry, nuclear and particle physics, applied mathematics and metallurgy. Our best, I am happy to say, is electronics, but there are also some strange areas at the top of the list — public health, veterinary medicine, pathology, ecology, tropical medicine and the science of anaesthetics. I might be able to make something out of that if I were in the Opposition, but as a loyal supporter of the Government I shall not seek to do so. So far, Japan has not really got ahead of us in applying technology, but the seeds have been sown for our markets to be ripped away in the latter part of this decade and in the 1990s. We do not spend enough of our gross domestic product on basic research. Our main competitors spend twice as much. The Japanese now have four times as many academic researchers working in their laboratories as we have in ours. One cannot ignore those basic statistics. They are allied to job prospects. Co-ordination between the Department of Trade and Industry and the Department of Education and Science is essential, and it must not just be talked about—it must be acted upon.
With regard to the Government's fiscal practices, I have referred to the concern of trade associations about the Government's sponsorship role. At the CBI small businesses seminar last week great concern was expressed about the loss of capital allowances, especially in the starting up of new businesses. I hope that the Government will not consider it a U-turn of any kind to consider the increasing evidence of the way in which this restrains new business opportunities. In this respect, co-ordination between the Department of Trade and Industry and the Treasury is vital if the marvellous initiative of the former to launch cable television and communication in this country is not to be completely lost.
My hon. Friend the Member for Horsham (Mr. Hordern) referred to regional grants. On this I speak not just because I come from an area which does not have regional grants but because I come from the practice of engineering and I know that it is nonsense for people at one end of the country receiving regional grants to compete with people at the other end of the country, making the same bids for the same business with the taxpayer subsidising the bids. There was recently a bold and delightful statement to the effect that a foreign company was investing £500 million in a new factory in Scotland which would create 550 new jobs. Analysis shows, however, that the taxpayer is putting £100 million towards that, which is about £180,000 per job. According to Department of Education and Science figures, that is roughly the cost of training 10 qualified scientists and engineers over the next three years. The entire project, therefore, is equivalent to producing 5,500 qualified scientists and engineers between now and 1987. The extraordinary thing is that that is precisely the deficit that the United Kingdom Information Technology Organisation predicts for 1987 in terms of its requirement

for qualified engineers. Need I say more? I put it to the Government that industry, employment and education must act together and not in separate compartments. If the "star chamber" system can reduce Government expenditure by many millions of pounds, cannot that talent be reorganised to produce a star chamber mark 2 dedicated to forcing Ministers to concentrate on the addition of wealth to the economy?

Mr. Ted Garrett: Nothing in the debate so far has created a sense of reality. The House of Commons is probably the last place in which unemployment and job provision can be debated with sensitivity because we are not equipped to do so. Indeed, the House is notoriously inept at sensing the mood of frustration arising out of mass unemployment. I hope that the Minister appreciates that I speak as one who is not classified among the loony Left of my party, although some may think that I should be by the time I sit down.
I have a constant, nagging fear, which must be shared by many sensible, thinking people in this country, that unless we make startling gains in creative employment we shall face not just total upheaval but possibly further civil disturbance. For several years now I have noticed that young people in society are seeking all kinds of ways to opt out of the boredom of unemployment and the uselessness of short-term work without any end product. People ask why youngsters dye their hair funny colours, indulge in drug abuse, sneer at politicians and ignore t heir parents' wishes. I believe that it all stems from the lack of a sense of creativity because there is no productive work for them.
I left school when I was 14. I left on a Friday and I was down the mine on the Monday. I might still be in that industry if slackness of trade had not led to the single men being paid off. I then cycled 18 miles to work in the forge of an engineering factory. When I was 16 I was given the opportunity to serve an engineering apprenticeship. That was no mean achievement in those days because there were 2 million unemployed out of a population of 46 million and one had to prove one's ability both at night school and at work. Above all, however, working a 47-hour week, one felt that one was achieving something and bettering oneself. One learned about Pythagoras, having never heard of Plato, as well as doing something important for society. Then came the outbreak of war in 1939, for which this country was so ill-prepared. But for the decision in the mid-1930s to take on apprentices so that they gained skill and knowledge, we should have been in a hell of a state trying to get our war effort up to standard. As it was, the skilled helped the semi-skilled and the semiskilled helped the unskilled, and that is how it was right through the 1950s and into the 1960s.
Engineering then suddenly became unfashionable, due to our education system. So far, even if salaries are better, no Government have corrected the idea that engineering — whether it be electronic engineering, chemical engineering, marine engineering or general engineering — is not a desirable profession. Therein lies the root of the decline in our manufacturing base and our lack of competitiveness. In the 1930s people realised that, even if there was not work for all, the apprentices and craftsmen were needed to maintain a base of technical knowledge. Regrettably, however, we have not done that in the past 15 years.
The Minister has told us that more money is to be spent on all kinds of technical, semi-technical and scientific education, but it is too late. I do not blame him personally. I do not even blame the Government. The problem goes much further back. As my, hon. Friend the Member for Hastings and Rye (Mr. Warren) said, we lack the personnel necessary for the recovery of our manufacturing base. In The Times, the Daily Telegraph, The Observer and The Guardian one constantly finds page after page of advertisements for people qualified in science, engineering, electronics and so on—project engineers, design engineers, systems engineers and the rest. In my time, those people worked through apprenticeship schemes. They progressed to production engineers through their own skills, achievements and acquisition of technical knowledge. That does not happen now. If, by some miracle, the number of skilled men were to surge upwards, it would take at least five years, and we are already missing out on some of the benefits of the American recovery.
I spent two days in the midlands looking at five machine tool plants. Each firm stated that its order book was improving and that it wanted more money to invest and capitalise on that improvement, but that it could not get money from the banks because it was not profitable. The firms also stated that they were desperately short of technical people. There are two technical training schools in my constituency. We got one of them after I made my maiden speech more than 21 years ago. I asked the then Minister, now Lord Marsh, for a technical school for training and retraining people, and we got it. The other school is partly sponsored by private medium-sized firms and partly by local authorities. Both those establishments have vacancies that they cannot fill because there is no money to pay for training. They are equipped with numerical control machines, and have fully skilled and trained instructors. The Minister may be able to do something about that. The staff fear that they may lose their jobs because of cuts and that they will never be able to obtain, from the thousands of unemployed, sufficient people to use the establishment to the full.
We must return to the four-year apprenticeship system. It is generally accepted in the House that training a person for one year is no good. Impetus is lost because, during the ninth or tenth month, the young person becomes uncertain and knows that he will soon be back on the dole. In four years, an apprentice widens his scope and gains greater knowledge and enthusiasm, so that when jobs are available he is better equipped to take them. The entire community then benefits.
A better climate may lead to more profitability, for example, in engineering. If a company makes a good product, it may be able to get loans from a bank. Banks make favourable noises about lending money to aid industry, but employers receive an unbelievable number of rebuffs when they seek money from banks. The reason for that is that companies are not sufficiently profitable to look good on the balance sheets.
We must reconsider training, and that includes training ladies. Many young women could fulfil a useful occupation if they were given the chance of training. I hope that the Minister will consider what I have said. If my analysis is not entirely correct, at least some of it is.
I welcome the decision to curtail the number of schemes available for aid and to introduce a simplified version. Now is the time to spread knowledge on a wider scale than the Government have done hitherto, especially in older firms that employ up to 50 people. Those companies can get most value from such aid. I hope that what I have said will sink into the Government's head.

Mr. Deputy Speaker (Mr. Ernest Armstrong): I am grateful to the hon. Member for bringing us back to 10-minute speeches.

Mr. Ian Lloyd: The House always listens with great care and attention to the hon. Member for Wallsend (Mr. Garrett), not only because he is not a member of the loony Left but because what he says is always interesting and important.
I am tempted to take up the hon. Gentleman's points about training but, alas, the restriction on time prevents me from saying so. The Select Committee on Energy visited Japan in June. We visited the Sharp corporation, which employs 36,000 people. Its products are to be seen all over this country. It had just built a training centre for 650 people, which looked something like a Hilton hotel. That will give the House an idea of the emphasis that the company places on training. It believes that no skill is likely to remain valid for more than three or four years. Its programme is to retrain 6,000 employees at a time. That is the world with which we must compete and that must dictate our views about and attitudes to training.
I wish to touch on a point made by the hon. Member for Barnsley, West and Penistone (Mr. McKay) about "Plan for Coal", although I do not wish to be diverted down that alley now. I examined all four documents of "Plan for Coal" with the greatest care last week and found 23 references to economic mining, productivity, competition at low cost levels and so on. Above all, I found a figure—I mentioned it on television—of 60 million tonnes of new mine capacity which is to replace 60 million tonnes lost through closures. We must not forget that that is an inherent part of "Plan for Coal", which was signed by Mr. McGahey and everyone who took part in the discussions. We cannot escape from that, nor can Mr. Scargill and those whom he misleads.
The Leader of the Opposition makes colourful and acceptable contributions to our debates, and there is no harm in that. However, that colour should not confuse his statistical vision. As a politician, he is entitled to exploit, interpret and criticise figures, but he is not entitled to invent them. I shall give the House two examples of his inventions. He said:
in the 17 months between the last Queen's Speech—the last undertaking to increase economic prosperity and reduce unemployment … inflation has increased by 27 per cent.
I checked that extremely carefully. The economic statistics for October show that, from June 1983 to December 1984, inflation was 5·5 per cent. If the Leader of the Opposition introduces statistics and claims to base his arguments and views on them, the least we can expect is that they should be accurate. Of course, we would permit one mistake, but not two.
The right hon. Gentleman went on to say that there had been a decline of £35 billion in total investment since 1979. I also checked that figure, and it is far from declining. Gross domestic fixed capital formation for 1979 was £43 billion, for 1980 £41 billion, for 1981 £38 billion,


for 1982 £40 billion and for 1983 £42·3 billion. There is no decline of £37 billion there. Where did the Leader of the Opposition get the figure from? Does he expect the country to take him seriously when his statistical homework is so poor? He might have had a case—he might have thought of the rate of increase between 1973 and 1979 and have compared this with that. But the rate of increase in those years was from £33·5 billion to £43·9 billion. There is, therefore, no case.
The Leader of the Opposition then accused my right hon. Friend the Prime Minister of quoting Keynes. A long time ago — longer than I care to remember—I met a distinguished and white-haired gentleman at Cambridge. He had just come back from negotiating the loan. He was Lord Keynes and I sat gratefully at his feet and spent two or three years studying his theories and economics. If I can claim knowledge of anything it is of what Lord Keynes said and of his arguments. I was therefore astonished that the Leader of the Opposition should say:
I recommend to the Prime Minister almost anything else that John Maynard Keynes wrote."—[Official Report, 6 November 1984; Vol. 67, c. 17–20.]
Perhaps the Leader of the Opposition will shelter behind the word "almost". He then accused my right hon. Friend of misusing Lord Keynes' name and philosophy. Perhaps I might quote some of what Lord Keynes said.
I criticise state socialism … because it misses the significance of what is actually happening; because it is, in fact, little better than a dusty survival of a plan to meet the problem of fifty years ago, based on a misunderstanding of what someone said 100 years ago … I do not believe that the intellectual elements of the Labour Party will ever exercise adequate control; too much will always be decided by those who do not know at all what they are talking about; and if—which is not unlikely—the control of the party is seized by an autocratic inner ring, the control will be exercised in the interests of the extreme Left Wing—the section of the Labour Party which I shall designate the Party of Catastrophe.

Mr. Prescott: Keynes was a Liberal.

Mr. Lloyd: This is what Lord Keynes said about the Liberal party:
There is no place in the world for a Liberal Party which is merely the home of out-of-date or watery Labour men.
Some time ago I argued that the crude unemployment figures were no guide to policy and that we should examine the ratio of output with a high probability of sale to those who are effectively, necessarily and indispensably employed in their occupations. I suggested that that denominator should be taken as the crucial index and that it should not include those who were employed for any other reason, including social reasons, sympathy or anything else. I concluded that some 10 per cent. to 20 per cent. of the so-called statistically employed at that time did not and would not fall within any conceivably rigorous definition of employment. We were carrying and concealing—I have said that often—some 2 million to 3 million unemployed. The events of the past 10 to 15 years, like the falling of the water level of a lake that has been drained, have revealed those pockets of unemployment because productivity in the firms and industries concerned did not fall at an adequate rate. Nothing has changed. The concealed unemployment is now stark. Although it has been revealed, we hear on every side arguments about defending jobs. In that regard the people who mislead the miners and others have much to answer for. There are means by which to defend jobs and there are means that are utterly ineffective and destructive when it comes to producing employment. The latter are strikes and

occupations of factories or of rigs such as we recently saw at Cammell Laird. They are high tax and high energy costs.
Where are the lowest unemployment figures? My right hon. Friend the Secretary of State today mentioned the United States and Japan. The United States is a continent and energy rich; Japan is an island and energy poor. In the long term, Japanese experience and conditions are therefore more relevant to us. I confirmed that judgment when the Select Committee was in Japan in June. The great boom of the 1950s and 1960s was directly related to low real costs of energy and vast quantities of it. During the 1970s, Governments taxed energy until the kilocalories screamed. We wonder why our entire energy-based industrial civilisation is finding it difficult to get moving again. What is Japan doing? The answer is relevant to us. I have news for Mr. Scargill. Japan imports energy on a large scale — 83 per cent. of it in 1982. Energy represents 50 per cent. of the value of its imports and 74 per cent. of that is accounted for by oil. Its policy is to reduce dramatically its dependence on oil.
Japan's demand for coal in 1982 was 95 million tonnes—roughly the same as ours. In 1978 it was 78 million tonnes and it rose to 97 million tonnes last year. That represents a substantial increase over the 61 million tonnes of 1960, of which only 50 million tonnes was indigenous Japanese coal. Coal production in Japan has been reduced steadily. Indigenous production has been reduced from 50 million tonnes to 16 million tonnes because it is all high-cost coal and an efficient energy-intensive economy wants no high-cost coal. However, coal consumption continues to rise. It is based on imports that have risen from 58 million tonnes in 1979 to 92 million tonnes in 1982. In 1985, 8GW of generating capacity will be coal-fired—in 1995, 21GW will be coal-fired. Japan has not turned its back on coal. The latter figure will represent 12 per cent. of its electricity demand and the increase in coal consumption for electricity generation will be from 15 million tonnes to 33 million tonnes. The entire increase will be met by low-cost imports from Australia and the United States. On that basis, a small but significant proportion of the extremely efficient Japanese energy performance will be met.
Even more important is Japan's nuclear power. Japan already has 26 major nuclear reactors—13 boiling water reactors, 11 pressurised water reactors of the type that we are having an inquiry about at Sizewell and two others. They produce 18 GW or 12·7 per cent. of Japan's electrical generating capacity. In Britain, 6 per cent. of our generating capacity is nuclear-powered. That might seem disturbing but we should consider what is planned. We should examine the future in the country from which our major industrial competition will undoubtedly come. Under construction are seven BWRs and five PWRs, producing 12 GW or 22 per cent. of generating capacity., by 1993. Under the heading of co-ordinating for construction, which I should not like to define, there are five PWRs and one other reactor of a type that is yet to be decided producing another 5·2 GW. Under the heading of planning are four BWRs, two PWRs and three others of a type yet to be decided producing another 9·4 GW. That gives a total of 26 GW or, by the end of the century, 54·9 GW of nuclear-powered electric generating capacity. That will mean 28 per cent. of their needs by 1990 and 38 per cent. by the year 2000.
This is of the utmost significance to the United Kingdom. The Japanese are convinced that with their unique energy dependence they must become the most energy-efficient country in the industrial world. From what I saw and was able to judge, they have every intention of achieving that objective, and their performance in the past suggests that they will be well able to do it. If this comes about and we in the United Kingdom go on as we are—I cannot find words to describe what is happening in the coal industry; it is a self-destructive phenomenon of the most astonishing and depressing kind — against the nuclear programme, although we have a significant nuclear industry, in comparison with what we saw in Japan the chances of the British nuclear industry competing in what the Japanese expect to be a market for 3,000 pressurised water reactors world-wide by the middle of next century are extremely small.
Hon. Members may ask how the Japanese have done this, how they have overcome public opposition and how they have dealt with the protests which accompany nuclear development not only in the United Kingdom but, to be fair to ourselves, in the United States. It is interesting to discover that, whereas we have had one public hearing, the Japanese have had 14 in seven years. They have nuclear study courses both for school teachers and for students. Nuclear power is taught in schools not only on a scientific level, which we may well do, but as a question of public policy on the social, energy needs level. They have promoted nuclear power public relations halls in all the major prefectures of Japan. The public utilities built them. They are open to the public. They have open days. They say, "Come and see what it will do for you, how and why". Some of our own advanced gas-cooled reactors have similar facilities. I am unable to make a comparison of the extent to which both are made available, but I suspect that the Japanese are ahead of us.
The Japanese also have financial incentives financed by the electric power development acceleration tax of 445 yen per thousand kilowatt hours of electricity consumed. Of this, 160 yen is spent for the benefit of local area education, cultural sports and recreation amenities and 285 yen is spent to finance work on the development of alternative energy sources. If we applied such a tax—roughly £2 per thousand kilowatt hours—the sum raised in the United Kingdom for these purposes would be £484 million.
Prefectures in which the generation of electricity exceeds half their needs receive in addition a Government grant for electricity supplied to other areas. The total subsidies for the promotion of nuclear power plant siting in the fiscal year 1981 was about £81 million, of which roads, sports, recreation and education took some 71 per cent.
Japan claims to lead the world in the efficient use of energy, and there is no doubt that it has the world's lowest unemployment figures. The question that I leave with the House is the extent to which this is cause and effect. I believe that that nexus is powerful and that we ignore it at our peril. This is where the main high technology competition of the western world will originate. Can we compete on the basis of high-cost coal, high-cost nuclear power and oil, even though we are an oil-rich economy for perhaps two decades — oil which the Japanese have decided as a matter of policy to eliminate or to reduce as fast as they can?
In this important debate on the Queen's Speech, we discuss many topics, but sometimes I think that we need the benefit of an office of technology assessment which can make this kind of information available to back up our policy in these very complex areas of technology. If such a proposal is made in due course, I hope that it will receive the support of right hon. and hon. Members on both sides of the House.

Mr. Gordon Brown: Whereas all Government supporters who have spoken so far have joined the Secretary of State for Employment in saying that unemployment is a difficult and deep-seated problem, I notice that none of them thought the measures that were announced today significant enough to say that they would bring down the level of unemployment.
If the Secretary of State is so concerned about getting unemployment down and his was the first of many measures that he would be announcing, why is it that in the Chancellor's autumn statement the budget of the Secretary of State for Employment is cut from £3·25 billion to £3·18 billion? Why, of the £100 million in total cuts announced today, is the Department of Employment having to bear £70 million? Why is there to be a cut in real terms, as I calculated from today's statement, in the budget of the Department of Employment next year over last year of nearly 4 per cent?
We are debating the Government's economic failure. We are debating their failure to get the economy moving. People are not unemployed because they do not want to work. They are unemployed because the Government have failed. Those whom the Government have made unemployed are being asked to pay the price and to take the blame for that failure.
The Government's failure is not just that for the first time in our industrial history we are importing more manufactured goods than we are exporting. It is not just that we are sending more money abroad than we are investing in our manufacturing industries. The Government's failure is that in vast areas of the country, Scotland being one of them, there are now more men and women without regular jobs than there are employed in manufacturing industry. More people are producing nothing than there are people producing goods of any description.
The Government say that they are creating real and lasting jobs and jobs in new areas and in new industries. The truth is that they have been creating real and lasting unemployment, and unemployment in new areas and, unbelievably, in new industries. They insist that the old industries must be sacrificed for the new. The reality is that our new industries are already being sacrificed to imports.
If that were not the case, why is it that in the high-tech, modern industry of computers, imports now exceed exports by £1 billion? Why is it that in information technology, according to the National Economic Development Council, we are at Third world level in status? Why is it that the trade deficit in data processing—another modern industry and another success story—is now £1 billion? Why is the trade deficit in electronics and telecommunications now approaching £2 billion? Why in that whole sector have we suffered a loss of 200,000 jobs over the past five years?
Oil was to be the great success story. The petrochemicals industry was to expand. Why is it that 59


per cent. of our oil is exported to be processed abroad instead of being developed and providing jobs here? Why is it that our trade deficit in oil-based plastic jobs is now running at £500 million, which is one third higher than it was in 1979, when we are self-sufficient and gaining the most benefit from oil? Our oil industry was to have been the harbinger of the British economic miracle. It is now a damning catalogue of waste and missed opportunities.
As the CBI confirmed last week, the Government are killing off the new industries as brutally and as negligently as they have killed off the old ones.
For all the Government's talk of real jobs, they know that we are still losing manufacturing jobs at the rate of 5,000 every month—at a faster rate over a longer period than our competitors. In 1979 there were more than 7 million manufacturing jobs. Now there are only about 5 million. How many more manufacturing jobs in productive industries have to be lost before the Government finally leave office?
The truth is that over the past year the Government have not created one extra full-time job in Britain, with the exception, perhaps, of the appointment of a Minister Without Portfolio. When the Japanese are training 10 times as many workers as we are, which is one big significant difference the hon. Member for Havant (Mr. Lloyd) might have pointed out, when the French are sponsoring tomorrow's technologies and guaranteeing every person under 25 a job, when Germany is training 40 times as many adults as we are, when America is reflating and has reflated the economy in its fight against the evil of unemployment, the best that Britain can be offered under monetarism is a Minister Without Portfolio whose sole job is to minimise the Government's embarrassment at continually rising unemployment. He is a Minister Without Portfolio who is also a Minister without powers, policies, or a programme and without the faintest possibility of anything other than a few pounds to spend.
What is that Minister doing in his new post? It is not real work. It carries no real responsibility. There is not even a salary, only an allowance. He will not learn anything, because he will not have anything to do, and at the end of the year or so he will be completely expendable. The man who, as chairman of the Manpower Services Commission, sent thousands of young people on cosmetic and meaningless short-term schemes of pseudo-employment has now been sent by the Prime Minister on one of his own.
After five years of suffering to no point or purpose, with no prospect of recovery, all that we have from the Government, as we heard today from the Secretary of State for Employment, are empty gestures born of discredited policies of a failed Administration pursuing a bankrupt ideological solution that cannot and will not work. The recession will last until doomsday if the Minister Without Portfolio is all that confronts it.
The Chancellor, who, successively over four weeks, has been heard in silence by his own party conference, spurned by his friends in the City when he could not, after a speech at the Mansion House, halt the decline in sterling, deserted in only the last few days by his Prime Minister and her Cabinet, has the audacity to assert that the economy is in good shape, healthy, and fundamentally sound and that there is no crisis.
How can there be no crisis when there is desolation in the communities which Ministers refuse to visit and despair in the faces which they never see? How can the

Chancellor call an economy healthy when 4 million who want to work in it are producing nothing, when teenagers born in the 1960s, at school, in the 1970s, are condemned to the dole queues in the 1980s and beyond? How can he call it healthy when, as has become clear from the statements being made about wage levels in Britain, the Government's highest aspiration for Britain now seems to be to raise us to the level of the low-tech, low-pay economies of Korea and Taiwan, just when those economies are trying to move upwards into higher tech and higher-paid industries?
Five years ago the Government told us that the problems of unemployment and poverty could be solved only by the creation of more wealth for the wealthy. Now, five years later, when the rich have become richer, when profits have been rising to a record high without creating a single new job in the economy, the Government are saying that the problems of unemployment and poverty can now be solved only by the creation of more poverty for the poor.
When our wage levels are about the lowest in Europe, and certainly much lower than in America, when unit labour costs have been falling and are said to be the second lowest in the industrial world, when last year prices rose by 5 per cent. and for the lowest paid workers—women in manual jobs—wages rose by only 3·7 per cent., the Chancellor tells us that the poor must become poorer. that the real problem is not unemployment, but the unemployed. Having, as a matter of policy, made people poor by forcing them out of work, he now says that, even if they find work, they must remain poor. How much poorer have people to become to secure true prosperity for all?
There are women in my constituency whose wages have been halved over the past few years, without the creation of a single job. There are women in manufacturing work in my constituency who are earning only £1·56 an hour, who were told last week that their jobs were to go because the company was refusing to invest in the area. People cannot price themselves into jobs where no jobs exist We must ask the Government how much poorer they think people have to become, how much spending power must be taken out of the economy, how many more lost producers and lost consumers must there be in Britain before true monetarism arrives?
The Labour party's message is clear. There can be no recovery for Britain without the recovery of those who are unemployed. There can be no prosperity for Britain without the prosperity of those who are now poor. The Government may discard the unemployed and the poor as surplus to their requirements. The truth is that in Britain there is more talent on the breadline than in the board rooms and there is more ability stagnating at the employment exchanges than there is speculating on the Stock Exchange. The country knows what the Government fail to recognise. Only by the activity of those out of work and not their inactivity, only by mobilising the energies of the young and not encouraging their idleness, only by tapping the potential of those who are unemployed and not depending on their passivity can Britain return to full employment and the economy begin to grow again.

Mr. Charles Morrison: The hon. Member for Dunfermline, East (Mr. Brown) asks some pertinent


questions to which the Government are duty bound to reply. The hon. Gentleman was strong on criticism but weak on constructive proposals to overcome our problems.
I want to make two quick preliminary remarks. First, it is important to emphasise to the Treasury that the British people are not prepared to put up with any cut in overseas aid. Secondly, this year, the main piece of legislation with which the House will be dealing is the abolition of the GLC and the metropolitan counties. It is difficult to comprehend how London will work with no directly elected city-wide authority. However efficient the boroughs and the quangos may be, to expect a city to operate without a city-wide authority is almost certainly to expect the impossible. West of the iron curtain, if the Bill becomes law, London will be the only major city without a city-wide authority. Is every city and Government wrong?
My right hon. Friend the Secretary of State made an excellent, constructive, sensible speech, understanding of the needs and problems of Britain. Therefore, it is all the more regrettable that he has to answer for unemployment. But I suppose that the Treasury cannot be asked to respond to every debate that we have. However, it might have been pleasant to have had a Treasury Minister on the Front Bench during the debate.
The hon. Member for Dunfermline, East said that the Government's failure was that in many areas there are more people producing nothing than there are producing something. The Government Front Bench do not need reminding that several of my hon. Friends and I have consistently expressed fears that the Government's economic policy would lead to higher unemployment. We have consistently been told that we were wrong. Consistently and inexorably unemployment has risen. Consistently and regrettably events have proved that the fears that we expressed were correct. As is the way in politics, we have consistently made ourselves unpopular as a result.
The Queen's Speech states:
my Government remains deeply concerned about unemployment and will continue policies designed to achieve better opportunities for employment".
The trouble is that existing policies are not reducing unemployment, and I feel that the Chancellor of the Exchequer has too strong a belief in his own theories and policies. The result is that he has been consistently overoptimistic about their consequences. If only he would adopt a little more scepticism, it might breed a little more flexibility and a little more ability to listen to the ideas of others or, even more radically, to adopt some of those ideas.
Plenty of ideas are floated from the Left, Right and Centre of the Conservative party. Not all sections of the party will agree on all the ideas, but there is much common ground. It is no use Ministers saying repetitively that all other policies have failed and that, therefore, there is no alternative. That is simply not so. On some counts at least, earlier policies were more successful. Even if it were true that there is no alternative—which I do not accept—people will not believe that if the Government's policy does not produce the desired or forecast results.
I believe that a successful economy requires low inflation, a healthy balance of payments, a reasonable level of economic growth and full employment. As the

hon. Member for Stockton, South (Mr. Wrigglesworth) said, no one should detract from the Government's achievement in lowering inflation to 4·7 per cent. The Government must be given the fullest credit for that. It was a difficult and painful task.
Outwardly, the balance of payments looks adequate, but on closer analysis it does not look so rosy because our balance of trade on current account has steadily deteriorated from a £7·2 billion surplus in 1981 to a surplus of only about £1 billion this year. Mr. Scargill must take some of the blame, but there are other reasons.
As my hon. Friend the Member for Horsham (Mr. Hordern) pointed out in the Daily Telegraph last week, production in some of our basic industries ran down by at least 20 per cent. between 1979 and 1983. In category after category of product, imports have grown as a proportion of home sales.
Overall, our imports of manufactures increased by 34 per cent. between 1981 and the first half of 1984, whereas our output of manufactures increased by only 4 per cent. The result is terrifying. A nominal trade surplus of £5 billion five years ago has turned into a £7 billion non-oil trade deficit this year.

Mr. Douglas Hogg: My hon. Friend has drawn attention to our propensity to import. Should not that propensity make us wary of treating cuts in direct taxation as the major instrument for reducing unemployment?

Mr. Morrison: I shall be coming to that point.
The huge change from a surplus to a deficit is bound to have had a considerable effect on jobs. It is no use pretending otherwise. The Government claim that what has happened is due to industry being uncompetitive and wages being too high. However, the Government indirectly take credit for improvements in productivity. In any case, wages are only one factor, and there are many others. When the Government first came to office sterling was overvalued. It is important to note that, although investment has improved and is improving, in the first half of this year it was still 26 per cent. below the level of 1979.
It is also important for the Government to listen to the opinions of individual industries. The chemical industry has a substantial balance of trade in favour of the United Kingdom, but that is deteriorating and the industry believes that it will continue to do so unless our Government match the support given by Governments elsewhere, especially in Europe.
The same is true for special steel and alloy production. Not long ago, employment in that sector totalled 18,000. Today, it is below 2,000. The reason is that companies doing similar work in countries such as France, West Germany and Sweden have been heavily subsidised and have undercut British companies. The situation is not the fault of this Government alone, but what has occurred should provide the Government with food for thought and, perhaps, action, particularly as our strategic interests are at risk in that sector.
The hon. Member for Dunfermline, East mentioned electronics. Our deficit in that sector has increased almost fivefold in the past five years. Perhaps the industry should be doing better of its own volition, but at the CBI conference warnings were given, once again, about the consequences for that industry of cuts in public expenditure which could reduce money for science and innovation.
Three points should be noted from all this. First, belief in a market economy is all very well as long as every other country has the same belief. However, as, in practice, none does, our industry will be at a disadvantage unless it is assisted to the same extent as industry elsewhere. It is no use pretending that company A in this country can compete against company B and its Government in another country. It cannot be done.
Secondly, although money for assistance is limited, there is at least a chance that some of what is available could be better used. My hon. Friend the Member for Horsham made that point.
Thirdly, if the performance and prospects for manufacturing industry can be improved, not only will the balance of trade improve, but more jobs will become available. Probably there should be more intervention by Government—not on the basis of poking their nose in where it is not wanted, but on the basis of responding to requests and developing a better partnership with industry, as exists in some of our competitor countries.
The Government must also act directly to create more jobs. I welcome today's announcement of the expansion of the enterprise allowance scheme, but enough time has passed to demonstrate that low inflation alone will not create jobs and nor will cuts in public expenditure.
Indeed—I pick up the point made by my hon. Friend the Member for Grantham (Mr. Hogg) in his intervention—my heart sinks every time I hear a Minister say that there must be cuts in public expenditure to make room for cuts in taxation. I can speak only for my area of the country, but not only is there little or no demand for cuts in taxation and not only do many people believe that cuts in public expenditure equal cuts in employment, but if there has to be a choice most of my constituents would choose to retain current levels of expenditure, both to maintain levels of public provision and services and to maintain or, better still, to improve employment levels.
The Government should be in no doubt that the understandable demand for cuts made in 1979 has largely disappeared. My right hon. Friend the Chancellor has said that the problem is not lack of demand. I suspect that that is not an opinion that would be shared by the unemployed, least of all by those in the construction industry.

Mr. Gerald Howarth: rose—

Mr. Morrison: I should prefer not to give way as I have gone on for long enough.
That is why I say yet again that the Government must initiate a much bigger programme of capital expenditure on necessary infrastructure work. If that involves a somewhat larger PSBR, so be it. This afternoon, my right hon. Friend the Chancellor took pride in the fact that next year the PSBR would be the lowest for a decade as a proportion of gross domestic product. In present circumstances I do not believe that that pride is justified.
Capital investment alone will not be enough. My right hon. Friend the Chancellor should also act on some of the suggestions put forward by my hon. Friend the Member for Beckenham (Sir P. Goodhart) and the One Nation group of Tory Members of Parliament, or explain why he cannot do so. Some excellent suggestions have been made, but there has been no response to them. Not all of the suggestions may be practical, but surely some are. My hon. Friend the Member for Horsham mentioned national insurance contributions and I agreed with him. It is

essential that we should make employing people less unattractive and less expensive. It is also very important to remove the disincentives to part-time work which exist in the benefit system and to take action to encourage part-time or whole-time voluntary retirement.
The need for more training has already been stressed so I shall not re-emphasise it, although I was glad to note the expansion of training that has been announced. If the Government took action along the lines that many hon. Members are suggesting, by the end of this Parliament they would be able to boast not only of their success in controlling inflation but also of their success in improving our balance of trade and, therefore, our balance of payments, in increasing the rate of economic growth and in cutting unemployment substantially. If they carry on as they are, I fear that the electorate will conclude that their list of achievements and successes looks a little thin.

Mr. Stan Crowther: I hope that the hon. Member for Devizes (Mr. Morrison) will forgive me if, in the interests of brevity, I do not respond directly to his speech. However, I agreed with almost everything that he said, and that will become obvious from my short contribution.
My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) graphically drew our attention to the two most alarming factors about the industrial scene. First, almost all of our surviving manufacturing industry is in a state of deep depression. Whatever glib words may come from Ministers, that is the harsh reality. The second, and perhaps even more alarming factor, is that Ministers are not worried about it and do not care. Consequently, they do not feel that they have any obligation or, indeed, motive to provide the same support and encouragement for British manufacturers as the Governments of West Germany, Italy, France, the United States and Japan give to their manufacturers. That is the biggest problem facing us. In response to what the hon. Member for Cambridgeshire, South-West (Sir A. Grant) said, I should emphasise that I am making a plea not for protectionism but for enlightened self-interest.
We live in a hard world, and our Government should adopt the same attitude towards those industries as nearly all the other developed countries adopt. In one sense, perhaps, I am making a plea for a little Gaullism in this country. The sort of cosmetic measures mentioned by the Secretary of State for Employment are no substitute for the development of an economic policy that will create the environment in which manufacturing industries can grow and flourish. I appreciate the very limited importance of such measures. Of course it is helpful if one can assist people to set up in business, but it is no use at all if there is no market for their products. When people are setting up enterprise zones, giving out money and excusing businesses from rates, that tends to be forgotten. In the long run those businesses must be able to sell what they produce if they are to stay in business. At present that is not happening.
There is a declining market for almost every type of product. Earlier this year the Trade and Industry Committee made a detailed inquiry into the quite appalling imbalance of trade in manufactured goods as between this country and the remainder of the EC, including the prospective members, Spain and Portugal. Lest any hon. Member has forgotten just how bad it is, I should point out


that in 1983 the balance against this country was more than £8 billion. That is not marginal, but represents a ratio of 3:2 against us in trade in manufactures with a part of the world with which we do 40 per cent. of all our overseas trade. Therefore, it seemed quite a serious matter to us. We all deeply regret the enforced absence of the Secretary of State for Trade and Industry, but in evidence to the Committee he said:
What is important above all is our overall balance of trade not merely with the Community, not merely in manufactures, but with the world in all respects. Now, of course, it is to be regretted inevitably whenever we fall into a deficit in any commodity with any part of the world in one way, but it should not be regarded as overwhelmingly tragic provided we have a surplus in other commodities with other parts of the world.
Hon. Members will find that quotation in paragraph 31 of the report. Given that we are talking about a part of the world with which we do 40 per cent. of our trade and about manufactured goods which represent 70 to 80 per cent. of all our exports, the Committee did not go much for that attitude, and unanimously said:
We consider this attitude to be both complacent and shortsighted.
Indeed, it is. The Committee said:
Our current account is in surplus due to the sales of oil and gas, which some consider will decline over the next 10–20 years. It is imperative for the Government to look to the longer term in deciding to what extent the continued decline in manufacturing should be permitted to continue…we recommend that the Government takes urgent action to prevent the further decline of the UK's manufacturing base.
In other words, we asked the question that many people ask today—what will this country live on when the oil runs out, if our manufacturing industries have gone? We have had the Government's reply to that report, but there is not even a glimmer of an answer to that question. They say:
The Government is not complacent about the challenges facing manufacturing industry".
But the Government's reply is riddled with complacency, and to say that they are not complacent does not really help. Much of the problem is due to the alarming rise in
imports in recent years. In relation to the rest of the world our position is not quite as bad as it is with the Community. Our trade deficit in manufacturers with the whole world last year was over £5 billion. Because I wish to be brief I shall not list all industries and their import penetration levels, but the figures make sombre reading.
The Secretary of State referred to the motor car industry. We should be worried about the fact that 57 per cent. of all the motor cars bought in the United Kingdom are imported when only 10 years ago the figure was 27 per cent. That is a fantastic increase. That change has led to the loss of a huge number of employment opportunities, not only in the car industry but in all the industries which supply it.
Much damage has been done to the steel industry, in which I have a particular consitutency interest, and to the rubber, plastics and glass industries, all of which are losing jobs because of imported motor cars.

Mr. Gerald Howarth: I too am concerned about the motor industry, but is not the decline in support for the British motor industry caused by the British public's rejection of those motor cars? Should not the British motor industry be more competitive? Should not the hon. Gentleman advocate the immediate return to work of the Austin Rover men?

Mr. Crowther: I do not wish to discuss the dispute at British Leyland. It does not have much to do with the number of imported cars. An act of God did not create the enormous increase in imports but an act of Ford Motors and General Motors. The Government should take that up. Huge numbers of motor cars are being imported. It is disgraceful that Ford, a company which has received so much Government assistance, should have been directly responsible for £750 million worth of our adverse trade balance last year. It is time that Ministers had a quiet word in the ear of Sam Toy, the leading light at Ford, and said that it is time that he started exporting motor cars from Britain instead of importing cars from elsewhere. Multinational companies which have been helped to settle here should be required to do something for the British economy.
The sorry tale of decline and collapse is repeated in industry after industry. Whose fault is it that the policies, unswervingly adhered to by the Government for the last five and a half years, have so spectacularly failed to produce the promised results? Is it the fault of the workers, the managers, the public or the trade unions? It never seems to be the Government's fault. They never admit that their policies have gone wrong and that it is time to put them right.
One of the problems is the fact that the close interdependence between the manufacturing industry and the construction and transport industries is so dimly perceived, if it is perceived at all, by Ministers. Anyone with half an eye can see that an upturn in one industry will create employment opportunities in another, just as a cut in one will depress them all.
Only a Government with a genius for ignoring the obvious could keep 450,000 construction workers on the dole while more than 2 million people are waiting for houses to be built. How can anyone with a sense of logic justify that? Lewis Carroll in his wildest dreams could not have produced such a wonderland.
The Government's obsessive hatred of the public sector and public expenditure, demonstrated once again by the Chancellor earlier today, is at the heart of many industrial problems. Everyone outside the Government, including many Conservatives, understand that capital expenditure within the public sector is needed to prime the pump. That is understood by organisations such as the CBI and the Building Employers Confederation which write to us about it every week.
It is a pity that Ministers cannot grasp the fact that almost every penny spent by a local council on a housing contract goes straight into the private sector. The artificial distinction between public and private is nonsense. Such expenditure does not merely assist the building industry, but it provides work for all the industries that supply the building industry. When the houses are built work is created for industries producing furniture, carpets, curtains, and all the other products for the home. A starter is needed and that can come only from public capital expenditure.
Every time the Government cut public expenditure they hit directly the private sector industries which they are supposed to champion. I wonder how much longer private sector industrialists will continue to support a Government who have so miserably failed to look after their interests and who have put many thousands of them out of business. Until there is a dramatic change in Government policy, I


fear that no improvements will take place. Tragically, once again today we heard nothing to make us believe that the Government even begin to understand the problem.

Mr. Richard Alexander: I assure the hon. Member for Rotherham (Mr. Crowther) that there is no complacency on this side of the House about the scale of unemployment. It remains the most intractable problem which the present Government have to face. About 263,000 jobs were created in the year up to March 1984, but the unemployment figure has remained at about 3 million because the number of people entering employment is greater than the number coming off the employment list for retirement. It is estimated that, just to cope over the next five years with the extra people coming on to the labour market, another 500,000 new jobs are required. That is the scale of the problem. Because the problem is large, it does not mean that the Government do not care.
The other day I visited the headquarters of the Newark district council's programme for the youth training scheme in my constituency and saw it in operation. It was impressed upon me that the training offered by the youth training scheme is sometimes not long enough. The hon. Member for Wallsend (Mr. Garrett) mentioned that. In some cases the scheme should be extended to two years, or at least young people should be able to come off YTS and go straight on to the community programme without having to complete the qualifying period, during which they are unemployed. We have heard a great deal about training and more training, and that may be a partial answer to the problems facing the young unemployed today.
I sometimes wish that people and politicians of all sorts would speak less about workers pricing themselves into jobs and less about workers taking cuts in their wages. There may be some merit in that theory, but it is always the other man—not me, not us—who has to take the cut. It is always someone else who must solve the problem.
I wish that Ministers would be more realistic in considering ideas fed to them. My hon. Friend the Member for Beckenham (Sir P. Goodhart), in the oft quoted pamphlet "Jobs Ahead", has provided several worthwhile ideas. However, as my hon. Friend the Member for Devizes (Mr. Morrison) has often said, there has been little response either for or against any of those ideas.
What work is being carried out in the Department of Employment to monitor the effectiveness of wages councils, especially as they affect youngsters? They squeeze youngsters out of jobs when an employer is trading on a very thin margin. It would be an enormous step forward in creating employment opportunities for youngsters if the artificial restrictions and bureaucratic nonsense that often accompany wages councils' awards were swept away.
Why should academics on those councils know best the rates for youngsters or how businesses can trade profitably and yet pay extremely high wages to youngsters? Why is it that pamphlets for the employer are often couched in such threatening and hostile terms? Pamphlets on redundancy payments, maternity benefits and so on are riddled with threats of fines and penalties for noncompliance. There is rarely a word of comfort, advice or help for the employer. There is rarely a mention of his

rights, but perhaps he has none. I urge my hon. Friend the Minister to accept that, while we make fine noises about encouraging the entrepreneur, we should not have the mailed fist and threaten them with pamphlets from the Civil Service.
I urge my hon. Friend to consider some of the anomalies surrounding the young workers scheme. The Department of Employment pamphlet, in its description of the scheme, states that it is
designed to encourage employers to employ more young people in full time and permanent jobs at rates of pay which reflect their age and relative inexperience.
Subject to certain conditions, an employer can claim £15 a week for a maximum of 52 weeks for an employee whose gross average earnings are £50 a week or less. Yet the retail, non-foods wages council — working in its ivory tower—says that the minimum rates for young workers should be £50·05 a week. That is denying youngsters the possibility of taking advantage of the scheme. The wages councils are out of touch with reality.
I have written to my hon. Friend the Under-Secretary about the example that I have cited. He has said in writing that that wages council knew of the £50 limit on the young workers scheme when it fixed the minimum rate at 5p above elegibility for participation. While the law makes nonsense of common sense, people will find ways around it. Even wages inspectors will informally advise employers that if they can get the young person to put in writing that he or she is not available for work for more than 36 hours a week, the payment can be made—otherwise, employers are liable for a large fine. It is another example of politicians and Ministers saying fine words about helping businesses and helping youngsters find employment, with the civil servants scuppering the whole scheme.
Ministers have no power to overrule awards by a wages council, with the result that the employer is discouraged from employing a young person. Potential employees, therefore, remain in the dole queue. It is an example of the Government being so hedged about by bureaucracy that often the schemes are of no use to those for whom they are intended. The barrier in the example that I citied is 5p. It would be laughable if it was not so serious for the young people who find themselves excluded from the scheme.
I believe, and the Government always state that they believe, that the future employment of the young lies largely in business, and especially small business. That is the area for job opportunities, especially for girls. A small retailer operating on tight margins told me that a girl had applied for a job. The retailer could just manage £35 a week, but no more. Thanks to the 5p, the Government scheme was of no use to her and she remains on the dole. It was a heartbreaking experience for both of them. It is a disgrace and an example of the pettiness of the restrictions with which the scheme is surrounded.
The small retailer must be supported if we are to encourage further employment. Yet we are actually rarely encouraging the small retailer, the person whose survival daily is a matter of conjecture.

Mr. Budgen: Will my hon. Friend deal with the difficult point that Britain is a signatory to the International Labour Organisation and that we must give notice soon if we are to withdraw from it? Obviously, international ramifications are involved. Unless the Government begin to mobilise support for getting out of the ILO, it will be too late.

Mr. Alexander: My hon. Friend is absolutely right, and I welcome his support. On previous occasions I have urged the Government to take a more robust stance and to say, here and now, "We will renegotiate the convention on wages councils; we will have nothing further to do with it."
We should be able better to look after those who are the employers of the future. The young unemployed are looking to us; their noses are pressed against the window. With a little imagination, a little foresight and much more care, we can bring those youngsters in from the cold. I urge my hon. Friend the Minister to consider that most carefully.

Mr. David Alton: I disagree profoundly with the comments of the hon. Member for Newark (Mr. Alexander) about wages councils, but I share his view that there is a need to encourage those who are involved with small retail businesses. There is a need to do rather more than encourage young people to participate in training schemes that all too often lead to long-term employment. I share the hon. Gentleman's enthusiasm for the argument of the hon. Member for Devizes (Mr. Morrison). To regard tax cuts as being the alpha and omega of economic policy is nonsensical and we need to do rather more than pursue the bland monetarism on which the Government have embarked over the past five years.
The Secretary of State told us at the outset of the debate that he would extend the number of youth training schemes. The hon. Member for Havant (Mr. Lloyd) quoted Keynes during his contribution, echoing a comment that was made by the Leader of the Opposition when he responded to the Gracious Speech. It is appropriate to recall that Keynes participated in the 1929 Liberal inquiry into Britain's industrial future. It was maintained at that time—those concerned were right to do so and I am sure that their belief is relevant now—that the only way to create new work was by the state playing a positive role. That is something from which the Government have moved away radically. I am sure that we must move back to that belief, and I am sure also that Keynes, as the precursor of Beveridge, would have shared Beveridge's view that there is no purpose in having people digging holes merely to fill them in again. We must give people useful employment in creative work that is geared to the needs of the community, instead of merely providing useless employment.
The hon. Member for Horsham (Mr. Hordern) referred to Liverpool and said that all the business in the city was done underneath the arches. He said that he discovered this when he travelled to Liverpool to write an article on unemployment. He admitted that there was little unemployment in his constituency. I took exception to his remark about all the trade in Liverpool being carried out underneath the arches. There are many successful businesses in Liverpool. Sometimes we are plagued by unnecessary militancy—and there are those who wish to use local commerce and the local authority as a stalking horse against Government policies. Confrontation will never be the way of solving the city's problems or those of local industry. However, it betrays an ignorance of the city to suggest that the black economy is all that there is in Liverpool. There are many successful businesses and the overwhelming majority conduct their affairs in an orderly way.
The Secretary of State's remarks at the commencement of the debate on the massive growth of unemployment revealed appalling complacency. No one would think, from his approach, that one person has become unemployed for every minute of every day since the Government were first elected, or that one fifth of manufacturing industry has disappeared since 1979. All the signs are that things will become worse.
Recent studies suggest that unemployment will continue to rise from the 3·1 million which the Government admit to about 3·5 million next year, and possibly 3·7 million by 1990. The justification for high unemployment—lower inflation—will look sick if the predictions of my hon. Friend the Member for Colne Valley (Mr. Wainwright) are right and inflation increases to the anticipated level of 7 per cent. Similarly, economic growth during 1986–88 will not exceed the sluggish rate of 1·5 per cent. That, too, will be disastrous for jobs.
The Government have succeeded in reversing one trend that was consistent during post-war years. The trend of greater income equality stopped in 1979 and since then there has been a new trend towards greater income inequality. The richest 1 per cent. of the population own about 21 per cent. of the nation's wealth and the poorest half of the population own only 4 per cent. of the nation's wealth. We Liberals believe that that wealth should be more evenly distributed, especially through profit sharing and co-ownership schemes. We believe also that work should be more evenly spread.
Unemployment is probably the gravest of our social maladies. Its deplorable results are ignored by politicians at their peril. Unemployment is high in all areas, but there are concentrated pockets of rampant unemployment in the north-west, the north, the west midlands and Wales. Unemployment is higher than 15 per cent. in those areas. In 10 of the metropolitan areas unemployment rates are over 22 per cent.—more than twice the rate that is found in more prosperous areas. A census that was carried out in the constituencies, the results of which were published last year, revealed that nearly 300 constituencies—they were predominantly in the south and were like the constituency that is represented by the hon. Member for Havant—had single-figure unemployment. However, in parts of my constituency unemployment is as high as 45 per cent. People in the north of England bitterly resent the ostentatious luxury of the affluent areas of employment in Britain. The jangling discords of our nation have made Britain a divided kingdom, not a United Kingdom.
Unemployment divides and it disaffects as well. Unemployment means having to do, and that can mean having to do with the rest of us in society. The unemployed form a ready-made breeding ground for the political revolutionary, the heroin pusher and the criminal fraternity. That is all too plain to see in a city such as Liverpool, where 104,000 — 20 per cent. of the population — are condemned to the dole. Of those 104,000, 16,000 are school leavers or students leaving higher education. Many feel the futility and desperation of being the best-educated youngsters on the dole queue.
The Government cannot argue that unemployment is a short-term phenomenon without hardship. About 63 per cent. of the unemployed have been without jobs for longer than six months and 42 per cent. have been out of work for more than a year. Official job vacancies represented almost 20 per cent. of the unemployed in 1979, but they now represent only 5 per cent. Even if the Government


claim that job vacancies are three times the official count, 85 per cent. of those who are unemployed are condemned to long-term unemployment. Many of them have little or no hope of ever finding a job. Some youngsters in Liverpool have told me that they believe that they face 50 years on the dole queue.
An examination of the age composition of the unemployed reveals that young people are especially badly hit. The House should reflect on the fact that 1·2 million of those who are out of work are young. Young people aged 24 years or less represent 39 per cent. of Britain's official unemployed. That means wasted talent, wasted productivity and, most importantly, wasted people. Next year will be International Youth Year. It will be a year when four out of 10 of the unemployed are under 25 years of age, when the rate of unemployment for those under 25 years is 21 per cent., and 10·3 per cent. for those over 25.
As the Minister has admitted, there are 350,000 people on youth training schemes. Although I am glad that the Government are doing more to try to make the schemes more relevant, many of the schemes do not lead to a job. I repeat the point that I made to the Secretary of State in an intervention. Youth Aid claims that about 116,000 trainees will leave the schemes this year without the chance of finding work. I hope that the Government will deal with that rather more comprehensively than the Secretary of State did earlier.
If the Government stand behind their claim that the dole and other subsidies turn people into social parasites, they are condemning generations of young people who are entering the work force to such a fate. The social consequences are enormous. New crime figures show that six crimes are committed every minute. On Merseyside, over 111,000 crimes have already been committed this year. Burglaries have increased by 12 per cent. and muggings by 33 per cent. Juvenile offences have doubled in the past 20 years and more than half of all offences are committed by those under 21, yet we continue to hear from the Treasury Bench that unemployment and crime are unrelated. The Government insist that one cannot possibly have anything to do with the other.
Criminals entice the unemployed, but there are others, including militant agitators and malcontents. These elements are stirring up unrest and violence. Violence cannot be permitted to threaten the well-being of the many. Those who lead others to burn, loot, intimidate or riot must feel the full force of the law. However, we should not delude ourselves by believing that punishment is prevention. History offers cold comfort to those who think that grievance and despair can be met with force. Effective law enforcement is only a beginning. The Government must learn to listen and respond. They must not pretend that the problems that face the nation are illusory. By denying the existence of serious problems which constitute a menacing challenge to the stability of our society they are merely immersing themselves in a fantasy world.
The reality is that 16 million British people are living below the margin of poverty, and some 500,000 people are living in homes with no inside toilet, running hot water or bathroom. Dreary estates, substandard homes, massive heroin addiction, racial tensions and lack of education are realities, as are frustrated expectations and disappointed hopes. Some 3 million people, many of them young, are unemployed and on the dole queue. We can either face those realities with imagination and wisdom, or we can

summon the forces of the market place, where only the strong survive. I sometimes think that the Government's philosophy is, "Do unto others before they do you."
We are encouraging people to be greedier and we are encouraging a society in which only the strongest can survive. Instead of cutting the taxes of the strongest, we should be creating more work for the weak, the vulnerable and those at risk. £1 billion of Government spending invested in a capital programme could create 165,000 new jobs, but the Government would rather give it away to a tiny minority in tax cuts.
On Merseyside, more than enough work needs to be done to make an immediate and massive impact on unemployment, and the same is true all over the country. There are roads, parks, houses and derelict land, all of which are in need of improvement. The infrastructure is crumbling beneath us, but imaginative new projects are needed as well. The hon. Member for Havant spoke of the need to embark on nuclear energy programmes. I can give the House an example of how we can avoid the need to build fast breeder reactors. If we were to construct a barrage across the mouth of the Mersey, not only would we create a source for one third of the electricity requirements of Merseyside, but we would provide 5,000 construction jobs immediately, a new river crossing, new deep-sea water facilities at the mouth of the Mersey for ocean-going container ships and, by impounding the Mersey basin, we could create massive, new recreational resources as well.
Do not let people tell us that this cannot be done. It has been done. It has been done at Murmansk and at San Malo on the le Rance estuary. At San Malo last year, more than 300,000 people visited the barrage that has been built there. That is spending with a purpose, and spending creatively.
We could also set up a new tourist authority to encourage people to come to Merseyside, not to see the desolation about which we heard earlier. It might correct the ignorance which we hear so often from the south. People might see the beauty of the Peak District, the Lake District and north Wales, and the surrounding countryside. They could also see the great buildings and assets of Liverpool and all the good things which our Victorian forefathers, when they wisely invested in the infrastructure of our city, bequeathed to Liverpool.
There is a role for an expanding entertainments industry in the north-west. I should like Merseyside to have its own television station. The most successful English television company servicing Channel 4 is a Merseyside television company producing "Brookside", a soap opera. Hon. Members may laugh, but that company, by showing innovation and initiative, has provided over 120 jobs in an area with massive unemployment. There is room for the natural talent of areas such as Merseyside to be harnessed. We have plenty of musicians, playwrights, comedians and actors. We have many people who could make a contribution if the local television industry were given a chance to expand.
All that is required to help Merseyside is some will and some imagination. My party is disappointed that the Queen's Speech lacks any imagination. It does not seek to reverse any of the Government's policies, nor to remove confrontation from the work place. It fails to address itself to the continuing deindustrialisation of Britain and its consequences. For all these reasons, the Liberal party will vote against the Government tonight.

Mr. Anthony Beaumont-Dark: It is a pity that the Treasury, which has more Ministers than the Navy has admirals, could not have spared one Minister to sit through this important debate on industry and employment, because the Treasury affects so many policies. I am sure that one or two Treasury Ministers will be here tomorrow to put the Treasury case, but in the end industry and trade bring the wealth that the Treasury sets about taxing.
I thought it regrettable that what the Bank of England and the Treasury could not do by persuasion — get people to accept the pound coin—the Treasury will now do by force. There is no doubt that 90 per cent. of the people do not want the pound coin, and I agree with them. It is to be regretted that my Government will make the pound into what is called loose change. What next? In America, where they have the mighty dollar, they have a dollar bill that is only 50p in our language. Why do we have to do away with the pound note simply because it is supposed to cost £3 million a year to print? That is a bad thing.

Dr. Jeremy Bray: rose—

Mr. Beaumont-Dark: I shall not give way. Some of us have been sitting here for six hours and have not come in just five minutes ago, and it would not be fair to give way.
If it is so that the electricity, gas and water industries are not asking for price increases, one is bound to look upon any increase as indirect taxation. In the city of Birmingham, whether we are speaking of industry or people, more people need heat, need to cook and to use water than need anything else. Therefore, an unnecessary price rise is indirect taxation that they can never avoid. I should be much happier if we thought of ways to reduce such taxation than thinking that a further 1p off the standard rate of tax will do anything except for a few people.
I come now to a matter to which all hon. Members who represent cities such as Birmingham, Bristol or Liverpool have persistently referred — the problems of the manufacturing areas. Too often people tell us about the sunrise industries, and talk about silicon valleys, but nearly all of these new industries are being built on virgin green belt land. The problem with that is twofold. First, one does away with much green belt land that we should be keeping, and, secondly, we waste a great deal of the resources that already exist in manufacturing areas, which could be turned to advantage.
As I understand the figures, the problem is clear. For every acre developed for industry in rural areas, five to 10 acres are required for housing and support services. This happens while cities such as Birmingham, Manchester and Liverpool are in a state of decay. What Governments should do, but progressive Governments have not done properly, is to try as much as possible to encourage the new and modern industries to go to those areas where they are particularly needed.
My hon. Friend the Member for Horsham (Mr. Hordern) put forward a good case. There has to be some great encouragement to get a developer to develop land in which he may find that he has drains about which no one has heard, and lots of cellars. The cost of developing land in the older cities is vastly more expensive than taking a

green field and plonking a factory on it. I hope that, as time goes on, the Government will increasingly give encouragement to inner city development. This is not just charity. The history of our industry seems to have changed, and perhaps for good, and a manufacturing city such as Birmingham has no assisted aid. Yet the figures show that, next to Northern Ireland, Birmingham has the highest number of people who are unemployed for more than 12 months.

Mr. John Evans: Thanks to the Tory Government.

Mr. Beaumont-Dark: No, it is not. There is a misunderstanding that all that has happened to manufacturing industry is the Government's fault. It has happened because of changes in fashion. As I said to the right hon. and learned Member for Monklands, East (Mr. Smith) this afternoon, if unions will insist on 20 per cent. wage increases in an industry that is still making a loss, is it surprising that the motor industry in Birmingham is unprofitable?
The Department of the Environment should not be so ready to give planning permission to build in green belt areas. It should be much more willing to help cities such as Birmingham, Manchester and Liverpool to modernise their facilities. Above all, the inner city developments that have been carried out by successive Governments should be extended. If given the choice between reducing taxes and using the money to help the inner cities and to make cities such as Birmingham more desirable so that they can prosper, Birmingham people would opt every time for the money to be spent so that Birmingham can be brought up to date, its industry modernised, and so that it can be as good an area in which to live as any other part of the country.

Dr. Oonagh McDonald: Today the Government have thrown out two crumbs by way of prospects for reducing unemployment. One has been the much-repeated statement by the Chancellor that he expects jobs in the service industries to increase, and he claims that there has already been a growth in jobs of about 243,000 during the past year. As the hon. Member for Devizes (Mr. Morrison) said, the Chancellor does not consider his own statements with sufficient scepticism. About 165,000 of those jobs are either part-time or jobs for women.
The Chancellor should reflect on recent history. Since 1979, the growth of employment in service industries has been 0·4 per cent.—a lower rate of growth than that achieved under the Labour Government, which was 1 per cent. Indeed, if the Chancellor chose to make comparisons, he would discover that that is the second lowest rate of growth in service industry jobs in the OECD countries. We beat Spain by a whisker. That has happened because of the Chancellor's failure to recognise that jobs in service industries — catering, cleaning, business services, banking and finance — depend upon a flourishing manufacturing sector. As that sector declines, so the possibility of growth in the service industries disappears.
Another crumb, this time from the Secretary of State for Employment, was the allocation of more money to the enterprise allowance scheme to create new companies. However, the effectiveness of such a concession in terms


of the Government's overall economic policy can be judged by what has happened since 1979. There have been more than 86,000 insolvencies; the current rate of bankruptcies is 162 a week; and the total rate of insolvencies during that period was 65 a day. More than a little money for enterprise allowances will be needed to put that right. Jobs and companies are disappearing apace, and the Government's economic policy will have to be reoriented if that is to be rectified.
Perhaps it is because of that high rate of insolvencies that the Queen's Speech contained proposals to change the laws governing insolvency. The Government chose to do that rather than to control the City and deal with the extensive fraud there.
To illustrate that point, I shall mention a company called Ravendale Securities, which was featured recently on the "Checkpoint" programme and in The Observer. Ravendale is a licensed dealer in shares. On the "Checkpoint" programme, we saw the sad spectacle of a retired disabled man—a Mr. Dunstan—who had bought shares through the company in flagrant breach of the Department of Trade and Industry's rules. He had never approached the company, but was approached by its representative on the telephone and sold shares that turned out to be worthless, although the company concerned was the sister company of Ravendale — London Venture Capital Market — which sounded impressive and formidable to such a man. As a result of coming into contact with the company he has lost his life savings.
The company is further described in The Observer business news section, where it becomes clear that Mr. Singh, the owner of Ravendale, had forged transatlantic links with Marsan Securities, two of whose former senior officers were subsequently censured by the Securities Exchange Commission in America. The company placed shares in Video Turf, owners of the rights to a horse race gaming machine. That was attacked because Camseal, Video Turf's parent company, had perturbing associations with individuals connected with the Signal Life and Cavendish Life frauds.
The "Checkpoint" programme showed that Ravendale had connections with one Thomas Quinn, who is involved with a company called Quikcolor. Thomas Quinn is in prison for fraud, and is a lawyer for the Genovese Mafia family in New York. Ravendale's relationships are highly questionable. It carries out sales in breach of the Department's rules, and it is intending to start over-the-counter sales— it wishes to find more people to con. The company is the responsibility of the Department of Trade and Industry, but it has done nothing, nor does it intend to introduce legislation this year, to control the licensed dealers or to impose proper controls on the City.
Even The Mail on Sunday condemned the activities of the Department. It referred to the Department as "these City dodos", and described the dodo as the mythical bird which, as its eyes were in the back of its head, never knew where it was going. The article went on:
Not so the Government, the DTI or the Bank of England. Licensed share dealers, for example, are policed by the DTI. Nevertheless investors lost heavily when Norton Warburg, Trentham Securities and Farrington Stead went belly up. No compensation fund there.
Yet in recent weeks these authorities have preached of the need for greater investor protection. From whom? The overworked and understaffed DTI?
Indeed, the Department is blind. The article continues:

The blunt truth is that while rubbing shoulders and sharing confidences with the world's mighty, the Government and its agents in the financial world appear woefully out of touch with the ordinary customer and employee upon whom any business success depends.
The Government are anxious about social security fraud. They are anxious about crime in the streets—and rightly so. Yet they turn a blind eye to expensive fraud in the City, which destroys the savings of many a small investor of whom the Government are allegedly so fond. For those who deal with licensed dealers, no compensation is available when they pay the price for what is lacking in the Department of Trade and Industry.
It is high time that the Department was prepared to examine companies such as Ravendale and made sure that they do not operate at other people's expense. It is high time that the Government brought forward proper legislation to protect investors instead of turning a blind eye to fraudulent dealings in the City.

9 pm

Mr. John Prescott: This is the sixth Queen's Speech that has been presented by the Government since they were elected in 1979. The [979 Queen's Speech proudly proclaimed that the Government
will give priority to controlling inflation through the pursuit of
firm monetary and fiscal policies. By reducing the burden of direct taxation and restricting the claims of the public sector…they will start to restore incentives, encourage efficiency and create a climate in which commerce and industry can flourish.
Such policies would
lay a secure basis for investment, productivity and increased employment in all parts of the United Kingdom.—[Official Report, 15 May 1979; Vol. 967, c. 48.]
Each Queen's Speech since then has reaffirmed that basic belief. Indeed, the Queen's Speech before us today reaffirms the basic monetarist view that the pursuit of a sound money policy will reduce inflation, which is the prime aim of the Government's policy. However., the major change in the speech is that it clearly recognises that unemployment will increase and talks no longer of providing work but simply of providing work experience for the unemployed. The statement today by the Secretary of State for Employment about more so-called training schemes is a reflection of the Government's failure to reduce unemployment. The Queen's Speech is an admission that the reduction of mass unemployment is not an object of Government policy, particularly now that lower inflation has not produced the required growth to reduce the number of jobless. That was reflected in nearly all the speeches today, and particularly powerfully by my hon. Friend the Member for Dunfermline, East (Mr. Brown) and, on the Government Benches, by the hon. Member for Devizes (Mr. Morrison).
We in the Opposition wholly reject the deplorable view expressed by the Chancellor of the Exchequer that Governments can do little to reduce unemployment. We believe that the Government have deliberately created much of the unemployment as a matter of direct Government policy. Today's announced expenditure cuts will increase unemployment. The Government accept that cuts in public expenditure can cause unemployment, yet reject the view that increased public expenditure can increase the number of jobs. Today, the Chancellor said to the House that he intends to reduce income tax by approximately £1,500 million. That statement exposed the choice now faced by the Chancellor. As the London Business School has said, he could invest that £1,500


million in public expenditure and capital investment and produce 270,000 jobs, or he could give it back in tax cuts, and it is estimated that that would increase the number of jobs by 45,000. As has been said in the debate, if the Government are making unemployment a priority, it is better to invest the money rather than simply give it back in tax cuts. I think that that is readily accepted by the House, and was reflected in the debate.
In a debate on unemployment on 30 October, the Secretary of State for Employment called for an intelligent and constructive debate on unemployment. It is my intention to adopt that approach. However, I am unsure about whether the latest gimmick of appointing Lord Young to deal with employment removes the responsibility from the Secretary of State. In the past fortnight, there have been two debates on employment in which my right hon. Friend the Member for Islwyn (Mr. Kinnock), the Leader of the Opposition, my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), the Deputy Leader of the Opposition, and my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), in a powerful speech, analysed the failure of the Government's economic and industrial policies and put forward the alternative policies of the Labour party for reversing the continuing decline in our industrial base and the increase in unemployment.
In this, my first speech since my appointment, I wish to address my remarks to challenging the Government's claim that increased unemployment is simply a reflection of the world recession which has affected all the developed countries equally. That is just not true. Much of Britain's unemployment has been brought about by Government policy. All the talk about the scourge of unemployment is mere rhetoric to conceal their guilt.

Mr. Nicholls: If unemployment is simply the product of Government policy, does that include the doubling of unemployment between 1974 and 1979 under the Labour Government?

Mr. Prescott: If the hon. Gentleman will wait, I shall substantiate my argument. A major part of the present unemployment in this country is the direct result of Government policy, and it is intended to be so.
Since May 1979 an average of 7,700 people have been thrown on to the dole every week. The official unemployment figure of 3·2 million is 2 million greater than when the Tories took office in 1979. Despite attacks on the Labour Government about the doubling of unemployment in their period of office, which was certainly not a satisfactory state of affairs — [Interruption.] It is not a party political point. In contrast to the state of affairs under the Tories, however, there were more people in employment when we left office than when we came to power.

Sir Anthony Grant: One has to go back into history. It is no good just talking about the last Labour Government. The history of mankind in this country has been that every time there is a Labour Government unemployment is higher when they leave office.

Mr. Prescott: According to the figures provided by the Department of Employment and the Library, that is simply not true. In the five years of Labour Government there was

an increase of 350,000 people in employment. In five years of Tory Government the number of people employed fell by 1·3 million. That is the scale of the decline in employment. Those are the Department's own figures. I will show them to the hon. Gentleman afterwards. There is no doubt about the record.
So catastrophic has been the effect on the economy that even the wealth-creating manufacturing areas such as the west midlands, which the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) was whining about, now have high unemployment. The Government even propose to reduce the money available for regional aid to less in real terms than was paid in 1964 when unemployment was under 500,000. So much for the brave new world of 1979.
Investment, always a barometer of business confidence, has fallen dramatically as unemployment has increased. Production is still below 1979 levels, and for the first time in our history this great industrial nation has had a deficit in manufacturing trade. Is this the new Tory promised land?

Dr. Jeremy Bray: Is my hon. Friend aware that the Department of Trade and Industry slipped in a parliamentary written answer today announcing an immediate moratorium on all new projects in information technology? Is that the way to increase investment?

Mr. Prescott: It is a clear example of the Government's behaviour. The Chancellor comes in with all his rhetoric about how we are turning the corner while another Department reduces investment in technology, the very subject about which we have heard so much in this debate. I leave it to the Minister of State to answer that.
The Government's sole obsession has been to reduce inflation. Tragically, however, the fall in inflation has not led to the growth in the economy so glibly predicted in 1979. In fact, for every 1 per cent. fall in the rate of inflation there has been an increase of about 500,000 in the number of people unemployed. That costs the nation more than £10,000 million a year. We are squandering our massive wealth from North sea oil on the enforced idleness of people on the dole. That is the greatest indictment of the Government's economic policies.
The Government do not lack originality in the breadth of their excuses for failing to achieve what they told us we would achieve. They told us that trade union reform would reduce strikes and obstacles to growth. It is apt to recall that the miners are now in their eighth month of strike action and that the Austin Rover motor company, using the law to impose its will, has contributed to discrediting the courts, undermining the official trade union structure and strengthening an unofficial strike. The Opposition warned the Government that that would happen if they introduced such legislation. That is in sharp contrast to the position at Jaguar. The men there have settled their dispute through patient negotiation rather than confrontation.
The Government's current excuse is the international recession. The Secretary of State for Employment said:
Other countries face the same problems…In Spain, Belgium, Holland and Ireland, unemployment is a lot higher than it is here."—[Official Report, 30 October 1984; Vol. 65, c. 1242.]
The 1984 report of the Organisation for Economic Cooperation and Development is an indictment of the Government's policies on employment. It compares how Britain has done under five years of Tory Government with


other OECD countries that have comparable economies. The report clearly exposes the selective use of that survey by the Secretary of State for Employment. Why did he not mention the other 18 OECD countries that have done better in containing the effects of world recession than Britain has? The report reveals the size, scale and length of unemployment as being considerably greater in magnitude in Britain than in other OECD economies.
During the 1970s Britain's unemployment level was equal to the average for OECD countries. I am pleased to see that we agree on that basic fact. In 1979 5 per cent. of the population were unemployed. After five years of Tory Government, Britain's unemployment figure had increased to 13·1 per cent., according to Department of Employment figures, whereas the average for OECD countries rose to 10·3 per cent. If we had secured the average increase in unemployment because of the recession factors that occurred in the 24 other OECD countries, our unemployment figure would be 2·2 million, not 3·2 million. I am pleased that the Secretary of State nods in agreement. The extra 1 million unemployed is, therefore, the direct result of the Government's monetary policies.
The OECD report shows that Britain's public expenditure programmes are different from those in other OECD countries. It makes it clear that the service sector, which the Government have recently discovered, has continued to expand in all countries, including Britain, but that the rate of growth has been reduced solely in Britain because of the Government's public expenditure policies. That is precisely what my hon. Friend the Member for Thurrock (Dr. McDonald) pointed out.
Britain was the only country to cut the number of people employed in public services, especially in transport and health. The decline in employment in the health services was four times greater in Britain than the average for other OECD countries. The Government's policies have thrown many more thousands on the dole in Britain than have been made unemployed in the rest of Europe.
The Government's privatisation programmes have also contributed directly to job losses. For example, before British Airways was privatised, 25,000 jobs were lost in preparation for privatisation. Last week we heard that thousands of jobs are to be lost in the munitions industry after privatisation, thus adding to the many thousands who are already unemployed as a direct result of the Government's privatisation policies. The same will be true when that other measure in the Queen's Speech—privatisation of the buses—is pursued. The predictions are that unemployment there will run into the thousands.
If we add to those Government policies the further public expenditure cuts that were announced today and the multiplying effects that they will have on the construction and other industries, we can see clearly how the extra 1 million unemployed can be attributed directly to the Government's policies. They cannot be attributable wholly to the world recession. It is Government policy to increase unemployment. The one bright spot in public expenditure has been the initiative of Labour-controlled local authorities to create enterprise boards and employment schemes to develop local economies. They have invested about £100 million to create and sustain 10,000 jobs at a cost of between £2,000 and £4,000 a job — considerably cheaper than those created by the Government. However, the Queen's Speech proposes to

reduce the resources and powers available to local authorities to pursue such activities to reduce unemployment.
The latest excuse for high unemployment is that wage rates in Britain are too high. We are told that we are pricing ourselves out of jobs. This self-styled patriotic Government have presided over the collapse of the British merchant shipping fleet, which has lost 600 ships and 30,000 jobs since 1969. Its international competitors are the flag of convenience countries which pay their seamen—Filipinos and Asians—the equivalent of £40 a week. Do the Government really believe that they can save the Merchant Navy by reducing the pay of seamen? The Chancellor has told us that a 1 per cent. reduction in the level of real earnings could produce 200,000 jobs and yet the Government's Treasury model predicts only 36,000 jobs a year with a 3 per cent. real cut in wages. Where is the evidence for the Government's claim?
The Secretary of State's Department has done research which shows that a 6 per cent. cut in manual earnings between 1980 and 1982 was accompanied not by extra jobs but by a loss of 1·75 million jobs. The Secretary of State now suggests that abolition of wages councils could make a significant change to the level of unemployment, as called for by the hon. Member for Newark (Mr. Alexander) in what I can only call a deplorable speech. He called for a reduction in the wages of people who are already earning much less than he pays for an evening out and a dinner.
As a former hotel worker, I know about low wages, as do workers in retail shops, laundry workers and hairdressers. My son is working in a hairdressing shop for a wage of £47·50 for a 40-hour week. Is the hon. Member for Newark seriously suggesting that unemployment can be reduced only by further reducing the wages of the lowest paid? Even the London Business School has said that abolition of wages councils will create only 1,600 jobs a year.
When we consider the huge benefits that the wealthy have gained in tax reductions, we are reminded of my right hon. Friend the Leader of the Opposition's powerful words: it appears to be the Government's belief that the rich are not rich enough and that the poor are not poor enough. What an indictment of the Government in the 1980s.
Nobody could accuse the Conservative party of having a modern outlook. I was struck by the similarity of the Government's policies to those put to Parliament in the King's Speech of 1928 by the Tory Prime Minister. Stanley Baldwin. His speech emphasised sound money policy and the fact that wages were too high. It also contained the obligatory mention of concern about the unemployed although the Government were pursuing policies to increase their number.
That Gracious Speech bore a remarkable resemblance to the one before the House today. It said:
The situation in the mining areas continues to engage the earnest attention of My Ministers, who are taking energetic steps to promote the success of the scheme of industrial transfer and migration.
Even the phrase "On your bike" is not new. The same speech included the eternal promise to bring
relief from the burden of rates.
It continued:
The proposed changes in local government and in the relations between the Exchequer and Local Authorities are


measures of far-reaching importance…to promote efficiency and economy in local government."—[Official Report, 6 November 1928; Vol. 222, c. 8–9.]
What has changed? In the debate on the Loyal Address in 1928 I am proud to note that it was the Labour party spokesman who offered an alternative based on a public expenditure programme to get people back to work—[Interruption.] The Secretary of State ought to pay attention to what he has described as an intelligent debate and ask himself whether the solutions that he proposes will not have the same effect as those proposed in 1928.
The essential question posed to this Government is whether they accept the argument in the Beveridge report in 1944, much quoted by the Prime Minister but little understood. Is it the proper responsibility of the Government to secure a high and stable level of employment? That is the question constantly asked of this Government, with no response from either the Secretary of State or the Chancellor of the Exchequer. I shall be happy to give way to the Secretary of State if he wishes to answer it now.

Hon. Members: Is it?

Mr. Tom King: I welcome the hon. Gentleman to his new responsibilities on behalf of the Opposition. I am sure that he will do me the credit of agreeing that that is precisely the question that I answered at the end of our last debate in response to the right hon. Member for Plymouth, Devonport (Dr. Owen).

Mr. Prescott: Given that there is no difficulty in answering the question, may I invite the Secretary of State to make the position clear in view of the charge that I make against the Government that they are deliberately pursuing a policy of high unemployment? They are doing that as a matter of policy and not as a consequence of their policies. I again invite the right hon. Gentleman to get to his feet. Will he make it clear whether he and his Government believe that they have a proper responsibility to secure a high and stable level of employment?

Mr. King: I am happy to repudiate completely the charge that it is this Government's policy to maintain a high level of unemployment. If by some strange transformation — [Interruption.] The hon. Gentleman asked me a question, and I am attempting to reply to it. If by some transformation President Mitterrand or Signor Craxi was able to stand at this Dispatch Box—or, for that matter, Dr. FitzGerald—he, too, would deny it. Both President Mitterrand and Signor Craxi are friends of the hon. Member for Kingston upon Hull, East (Mr. Prescott) in the Socialist International. Both would deny that it was their policy to achieve a higher level of unemployment. It is not this Government's policy, either.

Mr. Prescott: The House and the country will recognise the indifference of that reply on what is probably the most important political question before the Government. What the Secretary of State has not taken on board and what I have attempted to illustrate to him is that both Signor Craxi and President Mitterrand, who is an intelligent man, would undoubtedly say that depression had affected their economies. But my point is that the average level of unemployment in the OECD countries is 10 per cent. The fact that ours is far higher than it is in any

of those countries stems directly from this Government's policy. I do not ask the Government to bring unemployment down to zero, even if that were possible, but to reduce unemployment by the 1 million that they have deliberately created by their policies.
In the 1920s the Tory Governments produced great misery, mass unemployment and a growing disparity between the rich and the poor. In the latter part of the 20th century that has been brought back to us by another Tory Government. They demand, as they did in the 1920s, that the greatest sacrifice should be made by those least able to bear it. They express concern—

Mrs. Kellett-Bowman: rose—

Mr. Prescott: —about the unemployed while pursuing policies that seek to increase their numbers. It is our charge that much of that mass unemployment, heaped on Britain by the Government, arises directly from their policies. Indeed, it is a deliberate Government policy to create mass unemployment to achieve the same object as in the 1920s—to discipline the labour force and reduce the wage level.

Mrs. Kellett-Bowman: rose—

Mr. Prescott: In 1928 Stanley Baldwin could at least plead ignorance of an alternative way to reduce unemployment. Britain is sick and tired of the Government's catalogue of excuses for the ever-increasing mass unemployment. I accuse the Government not of ignorance but of deliberately pursuing policies with the express aim of increasing unemployment. A Labour Government—

Sir Anthony Grant: As the hon. Gentleman is treating us to a fascinating history lesson, will he move on from 1928 to 1931 to the first Labour Government which had a majority of 29 and tell us what the unemployment figures were under that Government?

Mr. Prescott: Yes. It is fair to say that a Labour Government found themselves with the collapse of the banking system—[Interruption.] I am not completely excusing them but I would at least claim that both the Macdonald Government and the Baldwin Government were ignorant of an alternative way of solving the problems. This Government cannot say that after a Labour Government returned Britain to full employment after the war.
A Labour Government will make it a central feature of Government policy to get people back to work. After the war we were the party that proved that full employment was achievable. We shall once again put the idle resources of capital and labour together to increase the wealth so essential to the development of the standard of living of our people.
The Labour party completely rejects the economic policies in the Queen's Speech that promise further unemployment, more misery and more despair and place greater burdens on those least able to bear them. I promise the Government that we shall not let up for one moment in our opposition to the belief that the present level of mass unemployment is inevitable. We shall give hope where there is despair among the unemployed. We shall seek to expose the reason for the scourge of unemployment so deliberately imposed upon our people. We shall emphatically reject the notion that unemployment must be a permanent feature of so many of our people's lives.
Unemployment will be a central issue at the next general election, with an electorate awakened to the Government's indifference to the plight of millions of the British people. They will elect a Labour Government committed to getting people back to work. Therefore, I urge my right hon. and hon. Friends to vote for our amendment in the Lobby tonight.

The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): Even after that speech by the hon. Member for Kingston upon Hull, East (Mr. Prescott), I think that it is still my duty to congratulate him on being appointed shadow Secretary of State for Employment. When the hon. Gentleman defeated me in his constituency by a narrow majority of 23,000 in the 1970 election, he made a powerful and outrageous speech after the count; he made the same speech again tonight.
The debate has been about both industry and employment. I shall concentrate on replying to the points made about industry, but anxiety about the shadow of unemployment has inevitably overhung the debate. The background, which the hon. Member for Kingston upon Hull, East sought to cast aside, is that unemployment in western Europe is at its highest level for 30 years. Furthermore, unemployment has been rising inexorably in this country for decades.
Only 10 years ago Peter Jay forecast that this country would face the prospect of unemployment in the low millions for a decade to come. He concluded that we needed radical social reform, radical institutional reform and reform of the trade unions. His solution included the creation of workers' co-operatives and wider share ownership — a point taken up by my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant) today, when he advocated much wider share ownership as a way of creating a community of interest between the two sides of industry to promote greater harmony and better industrial relations.
I can give my hon. Friend the assurance that he sought. We see wider share ownership as part of the solution. He will know that, as a result of the fiscal changes made by the Chancellor of the Exchequer, there has been a considerable increase in the number of company share schemes encouraging more people to buy shares and to identify their futures and fortunes with their companies.
As on other occasions when we have discussed unemployment, part of the debate has revolved around different interpretations of the economic policy of the United States. My hon. Friend the Member for Horsham (Mr. Hordern) made it clear that he believed that the United States had succeeded in generating more jobs because its labour market was more resilient and its housing policies encouraged much more mobility.
Those factors are behind the analysis of the Chancellor of the Exchequer, who has stressed that the record of the United States in creating more jobs than Europe is a longstanding record which pre-dates the more lax fiscal stance of the United States. About 13 million of the 15 million jobs created in the United States in the past 10 years—while there has been no net increase in Europe—were created during the time when the United States had a tighter fiscal stance. That is why we say that the record of the United States reflects its supply side policies, its enterprise culture, its more flexible labour market and, yes, its more flexible wages.
Another point that has not been emphasised in the debate is that jobs have been created in our economy. About 300,000 jobs were created in the service sector last year. There was a loss of some jobs in manufacturing, but 250,000 jobs were created in our economy at a time when employment in France and West Germany was falling.
Labour Members claim that many of those were part-time jobs. No doubt they will also point out that many were taken by married women returning to the labour market. I caution the House not to turn its face against part-time jobs. One in five of our workers is already in a part-time job. Some of the considerable growth in employment in the United States has comprised part-time work.
I agree with the Opposition in one respect, arid that is that it is significant that the new jobs created have not been filled by people on the unemployment register. That may tell us something about the problems that we still have with the poverty and unemployment traps. My right hon. Friend the Chancellor of the Exchequer well understands that and is determined to tackle it. That is why in his last Budget he concentrated all his tax reliefs on the bottom end of the scale.
The hon. Member for Stockton, South (Mr. Wrigglesworth) and my hon. Friends the Members for Horsham and for Grantham (Mr. Hogg) said that to deal with unemployment we must reduce the cost of employment. The hon. Member for Stockton, South referred to the propositions put forward by the right hon. Member for Plymouth, Devonport (Dr. Owen) about altering the balance of national insurance contributions and giving relief at the lower end of the scale. Indeed, that point was echoed in some of my hon. Friend's speeches.
My right hon. Friend the Secretary of State for Employment has said that the Government will look at those ideas, as they certainly deserve serious consideration. We recognise that we must reduce the cost of employment. Today, my right hon. Friend the Chancellor was able to announce that there would be no increase in class 1 flat-rate insurance contributions. Given that in October the national insurance contribution finally went, the total cost to employers of employing the labour force—despite the increase in the labour force—will fall this year in real terms.
It was because we recognised that argument that we abolished the national insurance surcharge. Opposition Members tended to take it for granted that it could easily be swept away, but if it were still levied on labour at the level that existed when the Conservative party carne to office it would mean adding 3·5 percentage points, or the equivalent of £3 billion, to the cost of employing people. That is the equivalent of another 12 points on interest rates. That is what the national insurance surcharge cost. When it was first imposed by the right hon. Member for Leeds, East (Mr. Healey) it was estimated that it destroyed—even then—60,000 to 150,000 jobs. How many jobs has it destroyed since then?
I had less sympathy with the points that were made about the infrastructure. There was reference to the CBI conference and to the CBI's views on infrastructure. The CBI made two points about infrastructure expenditure. First, although the CBI wanted increased expenditure on infrastructure, it wanted it to be financed by extra cuts in public expenditure. Secondly, in so far as it wanted more infrastructure, it was not just for the sake of creating jobs, but, as my hon. Friend the Member for Hastings and Rye


(Mr. Warren) said, in order to make industry more competitive, as infrastructure investment can have economic benefits. We agree with that and we judge infrastructure by whether it will give a return to the economy. But we do not want white elephant infrastructure. Of all people, the hon. Member for Kingston upon Hull, East should know that, because his constituency faces the Humber bridge — one of the biggest white elephants of all.
Aggregate capital expenditure in the public sector is at broadly the same levels as in 1978 and 1979. We are planning to spend about £700 million this year even on water and sewerage. I have noticed the calls for greater expenditure, but I have also noticed that the House of Lords Select Committee said that until the whole system was comprehensively surveyed there was a grave risk of misallocation and of wasting money. Private housing starts were at the highest level ever last year. This year, the construction industry's output has gone up by 5·25 per cent.
It is an illusion, with 3 million people unemployed, to think that we can take huge numbers off the unemployment register simply by spending more on infrastructure. The shadow Chancellor suggested that expenditure of £1¼ billion might create 750,000 jobs. First, that does not leave much for the rest of his £2·3 billion package. Secondly, his arithmetic is nonsense. Nothing like that number of jobs would be created. Such expenditure has to be weighed against the jobs that might be destroyed through extra taxes or extra interest rates. Investment is needed, not just in the public sector but in the private sector too. We do not want just a public sector recovery, but recovery of the private sector as well.
Because we have kept expenditure under control, we have brought interest rates down. The right hon. and learned Member for Monklands, East (Mr. Smith) referred to our interest rates as if they were higher than those in other countries. They are not. Our base rate is now 10 per cent., compared with 12½ per cent. in France and 17 per cent. in Italy. Our real rates are lower than in the United States and are not much different from those in Japan. That is a direct result of our policy of controlling public expenditure.
We were accused of being excessively gloomy about unemployment, as though we should manufacture optimism on demand. If people demand better news, they should read the CBI survey on employment published last Monday, in which Sir James Cleminson said that there were more rays of hope about job prospects than for some time. About 30 per cent. of the companies polled expected to employ more people in 12 months time than they do now.
That survey demonstrates an optimism in the medium term for small and medium-sized businesses, and well it might, because no Government in the world have done more to encourage small businesses. In the years from 1980 to 1983, 120,000 new businesses—net births over deaths—were created.
My hon. Friend the Member for Horsham said that our unit wage costs in manufacturing, though rising slowly by historic standards, were rising faster than those of our main competitors, particularly those of Germany and the United States. We do not think that it is for the Government to fix wages—that is for management and the unions—but the

Government are entitled to observe that there is a choice between higher wage increases and a lower level of employment, and lower wage settlements and a higher level of employment.
The shadow Chancellor seemed outraged when the Chancellor referred to wages merely holding steady. Anyone would have thought that we were talking about reducing people to rice bowl wages and making them the coolies of Europe. All that the Chancellor said was that if we held wages steady in real terms the economy would create another 500,000 jobs. The shadow Chancellor must agree with that, because he has advocated an incomes policy as one way of solving unemployment. He makes the right analysis, but draws the wrong conclusion.
Hon. Members have mentioned the Department's moratorium on support for innovation. No cut is involved. The budget allocated for innovation has been used up. Next year, expenditure will be at broadly the same level. Since we came to power we have massively increased it by three times in real terms. The problem is that there has been so much demand for Government assistance with technology.

Mr. John Smith: Why was that important announcement made through a parliamentary answer—the well-known parliamentary subterfuge for concealing information? Why did the Minister not come to the House today and tell us clearly that all research and development project applications and all support for the microelectronic industry were to stop? Even if the Government do not have sufficient money overall, they should allocate money to help those firms.

Mr. Lamont: I had intended to refer to that matter whether or not the right hon. and learned Gentleman had mentioned it. It is ludicrous for him to suggest that at the same time as the autumn statement there should have been another statement from another Minister.
We would take the hon. Member for Kingston upon Hull, East more seriously on the matter of jobs if we had not seen him on our television screens giving unequivocal support to the miners. The hon. Gentleman cut his political teeth in 1966 during the national seamen's strike. At that time he urged the then Prime Minister, Harold Wilson, to keep out of the dispute. He said, "All Mr. Wilson wants is for us to have a drink with the lads and a sausage cut by Mary." Since then he has adopted a different attitude. He now wants the Government to become more involved, but we will not become involved in a strike which the hon. Gentleman knows is costing jobs. Output is 1 per cent. below what it would have been without the strike. The strike is costing jobs in the firms that supply the NCB. It is costing jobs because interest rates are higher than they would otherwise have been.
If my right hon. Friend the Chancellor was minded to take the advice of the Opposition and take a risk with inflation, he could not do so, because confidence in sterling has been dented below what is economically justified as a result of the strike.
As my hon. Friend the Member for Havant said, the strike, both through its existence and far more if it were successful, threatens jobs in our electricity intensive industries. Coal is vital to the cost of electricity and electricity is vital to many of our capital intensive industries. The strike could have cost even more jobs if the Opposition's friends had been successful in closing down


jobs in the steel industry. They were not successful. That is the link between the strike and jobs. We might not expect the Bishop of Durham to understand that, but we expect someone who hopes to be Secretary of State for Employment to understand it.
The Opposition have sought to imply that there has been no economic recovery—or that is what they used to imply. They now imply that the recovery, although taking place, will not last. The fact is that in 1983 our gross domestic product grew faster than that in any of the other member countries of the EEC, while our inflation was below the EEC average. This year there would have been higher growth had it not been for the miners' strike. Nevertheless, my right hon. Friend has forecast that there will be growth of 3½ per cent. in 1985. That is a winning combination and the best performance by Britain since the 1960s.
That has been accompanied by truly remarkable levels of productivity gains in industry. Productivity between 1980 and 1983 has grown by 3½ per cent. and has risen by 20 per cent. in three years in manufacturing. That is, no doubt, part of the problem of unemployment. It is also one reason why the Chancellor can be confident about the prospects for exports, which are expected to grow this year by 7 per cent.
The Opposition amendment refers to the need to rebuild our industrial base. Our industrial base may be changing, but it is not disappearing. We may have had contraction in industries such as steel and shipbuilding, but that has been offset by growth in other industries. Our electronics industry is the fastest growing electronics industry in Europe. Microchip production over the past two years has been growing at rates of 35 and 40 per cent.
The right hon. and learned Member for Monklands, East sought to concentrate on the narrower definitions of manufacturing output alone. He said that manufacturing output remains below the 1979 level, but he did not mention that the decline has been taking place for a long time. The 1979 peak, as he chose to call it, was five points below that of 1974. The decline in manufacture as a proportion of GDP is a phenomenon that is common to many industrialised countries throughout the world.

Mr. John Smith: rose—

Mr. Lamont: The Government can only create the conditions in which growth can take place. Within those conditions it is up to firms and individuals. The right hon. and learned Gentleman astonished everyone in the Chamber when he referred to lack of demand and went on to instance the car industry. We are always told that we need a larger car industry. We are always told that we need a larger car market, but in 1983 car sales reached an all-time record level in Britain. The problem was that imports exceeded the number of cars that we produced. Car sales in 1984 will not be so high, but will not be far off the 1983 level. The Government believe that the demand exists and that the market exists.
It is encouraging that we have seen signs of improvement in British Leyland. The company has introduced new models and much praise has been given by Ministers to all those in the industry. It is therefore all the more regrettable, and almost unbelievable, that after so much ground has been recovered the workers in the industry seem determined to return to the bad old ways. As my hon. Friend the Member for Birmingham Selly Oak

(Mr. Beaumont-Dark) said, it is a pity that the unions in the car industry cannot follow the example of the car unions in the United States, which have settled with General Motors for a wage increase that is below the rate of inflation. The United States has the fastest growing economy in the world, yet its car unions are still more interested in job security than in inflationary wage increases.
The shadow Chancellor of the Exchequer said recently that the Labour party wanted a high-profit economy. He did not say it very loudly, and if he had said it more loudly we might have an Opposition worth worrying about. However, it is encouraging that some of the changed attitudes which the Government have helped to bring about are even reaching the shores of the Labour party. Socialists used to think that it was a sin to make profits, whereas Conservatives have always believed that it was wrong to make losses. I hope that the shadow Chancellor will rejoice that we have seen such a sharp upturn in company profits, which have risen by nearly a quarter in the first half of 1983 and 1984. The net rate of return is now back to a level which has not been seen since the 1960s. These profits will mean more jobs and more investment.
Total fixed investment, contrary to what the Leader of the Opposition said in his extraordinarily inaccurate speech in response to the Gracious Speech, is at an all-time high. Investment in manufacturing industry is increasing this year by about 15 per cent. I am glad that the shadow Chancellor welcomes the increase in profits. I am sure that he will welcome also the results of our privatisation programme. Every one of the companies that has been privatised by the Government has reported improved results. The profits of Cable and Wireless have doubled. The profits of Associated British Ports have nearly trebled in the first year after privatisation. The National Freight Corporation has had a profit of over £22 million, whereas it hardly broke even when it was in the state sector. The profits of British Aerospace are up by some 76 per cent. , it has a £5 billion order book, and it has participated in the largest ever civil aerospace order obtained in this country.
Much of the emphasis in the Queen's Speech is on competition and on opening up our economy to the fuller workings of the market place. It may be difficult for the Opposition to see the connection between competition and more jobs, but unless our economy is more flexible and responsive to the needs of the consumer we shall not generate those new jobs. As the hon. Member for Stockton, South said, privatisation has to be accompanied by more competition. That is why, in telecommunications, we have liberalised not just the basic network but the value added network services and the supply of apparatus. One needs only to look in any colour supplement at any weekend to see the new range of equipment on sale as a result of the lifting of BT's monopoly on apparatus. It is only by opening up our new industries to competition that we shall grab a respectable share of the world market.
The Opposition are against change. The other day the Leader of the Opposition had the effrontery to call my right hon. Friend the Chancellor of the Exchequer a Luddite. I think that that will go down in history as one of the most brazen examples of the pot calling the kettle black. The Opposition are against competition. They favour monopolies and are putty in the hands of any special interest group.
This is particularly true of the miners' strike, because that strike symbolises the wider struggle for change in our


economy. It was good of the Leader of the Opposition to find time in his busy diary to drop in to this debate. He is wrong to support the strike, because while Mr. Scargill may say that it is in defence of jobs, it is a strike that will destroy jobs. I may be doing the right hon. Gentleman an injustice. I accused him of supporting the miners' strike, but the hon. Member for Liverpool, Walton (Mr. Heffer) has said that the Leader of the Opposition is giving the strike only halfhearted support. I suspect that the truth is much worse. It is that his attitude is determined by how he thinks the strike is going. If the strike were going much more the miners' way, the right hon. Gentleman would be taking a different attitude. If there were any principle to the right hon. Gentleman's stance, he would have said that it was not the absence of a slot in his diary, but the absence of a ballot that caused him to cold shoulder Arthur Scargill. That would have been a good reason, but the Opposition's attitude to the ballot is like that of the Devil to holy water—they are not in favour of it.
We have heard nothing new today—just the same, tatty, tawdry, mildewed solutions. The shadow Chancellor wrote after the last election that the Opposition's policies had been a net vote loser. So what did they do? Under the title "The Future that Works", they brought out a document with the same policies that had been rejected by the electorate. The only interesting thing about the document was that its title bore an uncanny resemblance to that of a book written by the leader of the SDP, the right hon. Member for Devonport, except that his was called "A Future that will Work". Both of them offer the same old, tired solutions. They advocate more expenditure, which will simply drive up interest rates, fuel inflation and destroy jobs. Higher expenditure is not the way to cure unemployment. If it were, we should increase expenditure until the problem of unemployment was solved.
The Government and my right hon. Friend the Chancellor have plotted a course. It may be a hard path, but there is no easier way and it is certainly not a journey without hope. For that reason, I urge my hon. Friends to reject the Opposition's amendment.

Question put, That the amendment be made:—

The House divided: Ayes 196, Noes 353.

Division No. 3]
[10 pm


AYES


Adams, Allen (Paisley N)
Brown, N. (N'c'tle-u-Tyne E)


Alton, David
Brown, R. (N'c'tle-u-Tyne N)


Anderson, Donald
Brown, Ron (E'burgh, Leith)


Archer, Rt Hon Peter
Buchan, Norman


Ashley, Rt Hon Jack
Caborn, Richard


Ashton, Joe
Callaghan, Rt Hon J.


Atkinson, N. (Tottenham)
Callaghan, Jim (Heyw'd &amp; M)


Bagier, Gordon A. T.
Campbell, Ian


Banks, Tony (Newham NW)
Carlile, Alexander (Montg'y)


Barnett, Guy
Clarke, Thomas


Barron, Kevin
Clwyd, Mrs Ann


Beckett, Mrs Margaret
Cocks, Rt Hon M. (Bristol S.)


Beith, A. J.
Cohen, Harry


Bell, Stuart
Coleman, Donald


Benn, Tony
Concannon, Rt Hon J. D.


Bermingham, Gerald
Conlan, Bernard


Bidwell, Sydney
Cook, Frank (Stockton North)


Blair, Anthony
Cook, Robin F. (Livingston)


Boothroyd, Miss Betty
Corbyn, Jeremy


Boyes, Roland
Cowans, Harry


Bray, Dr Jeremy
Cox, Thomas (Tooting)


Brown, Gordon (D'f'mline E)
Craigen, J. M.


Brown, Hugh D. (Provan)
Crowther, Stan





Cunliffe, Lawrence
Martin, Michael


Cunningham, Dr John
Mason, Rt Hon Roy


Dalyell, Tam
Maxton, John


Davies, Rt Hon Denzil (L'lli)
Maynard, Miss Joan


Davies, Ronald (Caerphilly)
Meacher, Michael


Davis, Terry (B'ham, H'ge H'l)
Michie, William


Deakins, Eric
Mikardo, Ian


Dewar, Donald
Millan, Rt Hon Bruce


Dormand, Jack
Mitchell, Austin (G't Grimsby)


Douglas, Dick
Morris, Rt Hon A. (W'shawe)


Dubs, Alfred
Morris, Rt Hon J. (Aberavon)


Eadie, Alex
Nellist, David


Eastham, Ken
Oakes, Rt Hon Gordon


Edwards, Bob (Wh'mpt'n SE)
O'Brien, William


Ellis, Raymond
O'Neill, Martin


Evans, John (St. Helens N)
Orme, Rt Hon Stanley


Ewing, Harry
Owen, Rt Hon Dr David


Fatchett, Derek
Park, George


Faulds, Andrew
Patchett, Terry


Field, Frank (Birkenhead)
Pavitt, Laurie


Fields, T. (L'pool Broad Gn)
Pendry, Tom


Fisher, Mark
Penhaligon, David


Foot, Rt Hon Michael
Pike, Peter


Foster, Derek
Powell, Raymond (Ogmore)


Foulkes, George
Prescott, John


Fraser, J. (Norwood)
Radice, Giles


Freeson, Rt Hon Reginald
Randall, Stuart


Garrett, W. E.
Redmond, M.


Gilbert, Rt Hon Dr John
Rees, Rt Hon M. (Leeds S)


Gould, Bryan
Richardson, Ms Jo


Gourlay, Harry
Roberts, Allan (Bootle)


Hamilton, James (M'well N)
Roberts, Ernest (Hackney N)


Hamilton, W. W. (Central Fife)
Robertson, George


Hancock, Mr. Michael
Robinson, G. (Coventry NW)


Harman, Ms Harriet
Rogers, Allan


Harrison, Rt Hon Walter
Rooker, J. W.


Hart, Rt Hon Dame Judith
Rowlands, Ted


Hattersley, Rt Hon Roy
Ryman, John


Healey, Rt Hon Denis
Sedgemore, Brian


Heffer, Eric S.
Sheerman, Barry


Hogg, N. (C'nauld &amp; Kilsyth)
Sheldon, Rt Hon R.


Holland, Stuart (Vauxhall)
Shore, Rt Hon Peter


Home Robertson, John
Short, Mrs R.(W'hampt'n NE)


Howell, Rt Hon D. (S'heath)
Silkin, Rt Hon J.


Howells, Geraint
Smith, C.(Isl'ton S &amp; F'bury)


Hughes, Dr. Mark (Durham)
Smith, Cyril (Rochdale)


Hughes, Robert (Aberdeen N)
Smith, Rt Hon J. (M'kl'ds E)


Hughes, Roy (Newport East)
Snape, Peter


Hughes, Sean (Knowsley S)
Soley, Clive


Hughes, Simon (Southwark)
Spearing, Nigel


Janner, Hon Greville
Steel, Rt Hon David


Jenkins, Rt Hon Roy (Hillh'd)
Stewart, Rt Hon D. (W Isles)


John, Brynmor
Stott, Roger


Johnston, Russell
Strang, Gavin


Jones, Barry (Alyn &amp; Deeside)
Straw, Jack


Kaufman, Rt Hon Gerald
Thomas, Dafydd (Merioneth)


Kennedy, Charles
Thomas, Dr R. (Carmarthen)


Kilroy-Silk, Robert
Thompson, J. (Wansbeck)


Kinnock, Rt Hon Neil
Thorne, Stan (Preston)


Leadbitter, Ted
Tinn, James


Leighton, Ronald
Torney, Tom


Lewis, Ron (Carlisle)
Wainwright, R.


Lewis, Terence (Worsley)
Wardell, Gareth (Gower)


Litherland, Robert
Wareing, Robert


Lloyd, Tony (Stretford)
Weetch, Ken


Lofthouse, Geoffrey
Welsh, Michael


Loyden, Edward
White, James


McCartney, Hugh
Williams, Rt Hon A.


McDonald, Dr Oonagh
Wilson, Gordon


McGuire, Michael
Winnick, David


McKay, Allen (Penistone)
Wrigglesworth, Ian


McKelvey, William
Young, David (Bolton SE)


Maclennan, Robert



McTaggart, Robert
Tellers for the Ayes:


McWilliam, John
Mr. Frank Haynes and


Madden, Max
Mr. Don Dixon.


Marek, Dr John







NOES


Adley, Robert
Edwards, Rt Hon N. (P'broke)


Aitken, Jonathan
Eggar, Tim


Alexander, Richard
Evennett, David


Alison, Rt Hon Michael
Eyre, Sir Reginald


Amery, Rt Hon Julian
Fairbairn, Nicholas


Amess, David
Fallon, Michael


Ancram, Michael
Farr, Sir John


Arnold, Tom
Favell, Anthony


Ashby, David
Fenner, Mrs Peggy


Aspinwall, Jack
Finsberg, Sir Geoffrey


Atkins, Rt Hon Sir H.
Fletcher, Alexander


Atkins, Robert (South Ribble)
Fookes, Miss Janet


Baker, Rt Hon K. (Mole Vall'y)
Forman, Nigel


Baker, Nicholas (N Dorset)
Forsyth, Michael (Stirling)


Baldry, Tony
Forsythe, Clifford (S Antrim)


Batiste, Spencer
Forth, Eric


Beaumont-Dark, Anthony
Fowler, Rt Hon Norman


Beggs, Roy
Fox, Marcus


Bellingham, Henry
Franks, Cecil


Bendall, Vivian
Fraser, Peter (Angus East)


Benyon, William
Freeman, Roger


Best, Keith
Fry, Peter


Bevan, David Gilroy
Gale, Roger


Biggs-Davison, Sir John
Galley, Roy


Blackburn, John
Gardiner, George (Reigate)


Blaker, Rt Hon Sir Peter
Gardner, Sir Edward (Fylde)


Body, Richard
Garel-Jones, Tristan


Bonsor, Sir Nicholas
Glyn, Dr Alan


Bottomley, Peter
Goodlad, Alastair


Bottomley, Mrs Virginia
Gorst, John


Bowden, A. (Brighton K'to'n)
Gow, Ian


Bowden, Gerald (Dulwich)
Gower, Sir Raymond


Braine, Sir Bernard
Grant, Sir Anthony


Brandon-Bravo, Martin
Greenway, Harry


Bright, Graham
Gregory, Conal


Brinton, Tim
Griffiths, E. (B'y St Edm'ds)


Brown, M. (Brigg &amp; Cl'thpes)
Griffiths, Peter (Portsm'th N)


Browne, John
Grist, Ian


Bruinvels, Peter
Ground, Patrick


Bryan, Sir Paul
Grylls, Michael


Buck, Sir Antony
Gummer, John Selwyn


Budgen, Nick
Hamilton, Hon A. (Epsom)


Bulmer, Esmond
Hamilton, Neil (Tatton)


Burt, Alistair
Hampson, Dr Keith


Butcher, John
Hanley, Jeremy


Butler, Hon Adam
Hannam, John


Carlisle, John (N Luton)
Hargreaves, Kenneth


Carlisle, Kenneth (Lincoln)
Harris, David


Carlisle, Rt Hon M. (W'ton S)
Harvey, Robert


Carttiss, Michael
Haselhurst, Alan


Cash, William
Hawkins, C. (High Peak)


Chalker, Mrs Lynda
Hawkins, Sir Paul (SW N'folk)


Chapman, Sydney
Hawksley, Warren


Chope, Christopher
Hayes, J.


Churchill, W. S.
Hayhoe, Barney


Clark, Hon A. (Plym'th S'n)
Hayward, Robert


Clark, Dr Michael (Rochford)
Heathcoat-Amory, David


Clark, Sir W. (Croydon S)
Heddle, John


Clarke, Rt Hon K. (Rushcliffe)
Henderson, Barry


Clegg, Sir Walter
Heseltine, Rt Hon Michael


Cockeram, Eric
Hickmet, Richard


Colvin, Michael
Hicks, Robert


Conway, Derek
Higgins, Rt Hon Terence L.


Coombs, Simon
Hind, Kenneth


Cope, John
Hirst, Michael


Cormack, Patrick
Hogg, Hon Douglas (Gr'th'm)


Couchman, James
Holland, Sir Philip (Gedling)


Cranborne, Viscount
Holt, Richard


Crouch, David
Hooson, Tom


Currie, Mrs Edwina
Hordern, Peter


Dickens, Geoffrey
Howard, Michael


Dicks, Terry
Howarth, Alan (Stratf'd-on-A)


Dorrell, Stephen
Howarth, Gerald (Cannock)


Douglas-Hamilton, Lord J.
Howell, Rt Hon D. (G'ldford)


Dover, Den
Howell, Ralph (N Norfolk)


du Cann, Rt Hon Edward
Hubbard-Miles, Peter


Dunn, Robert
Hunt, David (Wirral)


Durant, Tony
Hunt, John (Ravensbourne)


Dykes, Hugh
Hunter, Andrew





Jackson, Robert
Oppenheim, Phillip


Jenkin, Rt Hon Patrick
Oppenheim, Rt Hon Mrs S.


Jessel, Toby
Ottaway, Richard


Jones, Gwilym (Cardiff N)
Page, Sir John (Harrow W)


Jones, Robert (W Herts)
Page, Richard (Herts SW)


Joseph, Rt Hon Sir Keith
Parris, Matthew


Kellett-Bowman, Mrs Elaine
Patten, Christopher (Bath)


Key, Robert
Patten, John (Oxford)


King, Roger (B'ham N'field)
Pattie, Geoffrey


King, Rt Hon Tom
Pawsey, James


Knight, Gregory (Derby N)
Peacock, Mrs Elizabeth


Knight, Mrs Jill (Edgbaston)
Pollock, Alexander


Knowles, Michael
Powell, Rt Hon J. E. (S Down)


Knox, David
Powell, William (Corby)


Lamont, Norman
Powley, John


Lang, Ian
Prentice, Rt Hon Reg


Lawler, Geoffrey
Price, Sir David


Lawrence, Ivan
Prior, Rt Hon James


Lawson, Rt Hon Nigel
Proctor, K. Harvey


Lee, John (Pendle)
Pym, Rt Hon Francis


Leigh, Edward (Gainsbor'gh)
Raffan, Keith


Lennox-Boyd, Hon Mark
Rathbone, Tim


Lester, Jim
Rees, Rt Hon Peter (Dover)


Lewis, Sir Kenneth (Stamf'd)
Renton, Tim


Lightbown, David
Rhodes James, Robert


Lilley, Peter
Rhys Williams, Sir Brandon


Lloyd, Ian (Havant)
Ridley, Rt Hon Nicholas


Lloyd, Peter, (Fareham)
Rippon, Rt Hon Geoffrey


Lord, Michael
Roberts, Wyn (Conwy)


Luce, Richard
Robinson, Mark (N'port W)


Lyell, Nicholas
Roe, Mrs Marion


McCurley, Mrs Anna
Rossi, Sir Hugh


McCusker, Harold
Rost, Peter


Macfarlane, Neil
Rowe, Andrew


MacKay, Andrew (Berkshire)
Rumbold, Mrs Angela


MacKay, John (Argyll &amp; Bute)
Ryder, Richard


Maclean, David John
Sackville, Hon Thomas


McNair-Wilson, P. (New F'st)
Sainsbury, Hon Timothy


McQuarrie, Albert
St. John-Stevas, Rt Hon N.


Madel, David
Sayeed, Jonathan


Maginnis, Ken
Shaw, Giles (Pudsey)


Major, John
Shelton, William (Streatham)


Malins, Humfrey
Shepherd, Colin (Hereford)


Malone, Gerald
Shepherd, Richard (Aldridge)


Maples, John
Shersby, Michael


Marland, Paul
Silvester, Fred


Marlow, Antony
Sims, Roger


Marshall, Michael (Arundel)
Skeet, T. H. H.


Mates, Michael
Smith, Tim (Beaconsfield)


Mather, Carol
Smyth, Rev W. M. (Belfast S)


Maude, Hon Francis
Soames, Hon Nicholas


Mawhinney, Dr Brian
Speed, Keith


Maxwell-Hyslop, Robin
Speller, Tony


Mellor, David
Spence, John


Merchant, Piers
Spencer, Derek


Meyer, Sir Anthony
Spicer, Jim (W Dorset)


Mills, Iain (Meriden)
Spicer, Michael (S Worcs)


Mills, Sir Peter (West Devon)
Squire, Robin


Miscampbell, Norman
Stanbrook, Ivor


Mitchell, David (NW Hants)
Stanley, John


Moate, Roger
Steen, Anthony


Molyneaux, Rt Hon James
Stern, Michael


Monro, Sir Hector
Stevens, Lewis (Nuneaton)


Montgomery, Fergus
Stevens, Martin (Fulham)


Moore, John
Stewart, Allan (Eastwood)


Morris, M. (N'hampton, S)
Stewart, Andrew (Sherwood)


Morrison, Hon C. (Devizes)
Stewart, Ian (N Hertf'dshire)


Morrison, Hon P. (Chester)
Stokes, John


Moynihan, Hon C.
Stradling Thomas, J.


Mudd, David
Sumberg, David


Murphy, Christopher
Tapsell, Peter


Neale, Gerrard
Taylor, John (Solihull)


Needham, Richard
Taylor, Teddy (S'end E)


Nelson, Anthony
Temple-Morris, Peter


Neubert, Michael
Terlezki, Stefan


Newton, Tony
Thomas, Rt Hon Peter


Nicholls, Patrick
Thompson, Patrick (N'ich N)


Nicholson, J.
Thorne, Neil (Ilford S)


Norris, Steven
Thornton, Malcolm


Onslow, Cranley
Thurnham, Peter






Townend, John (Bridlington)
Wells, Bowen (Hertford)


Townsend, Cyril D. (B'heath)
Wells, Sir John (Maidstone)


Tracey, Richard
Wheeler, John


Trippier, David
Whitfield, John


Trotter, Neville
Whitney, Raymond


Twinn, Dr Ian
Wiggin, Jerry


van Straubenzee, Sir W.
Wilkinson, John


Vaughan, Sir Gerard
Winterton, Mrs Ann


Waddington, David
Winterton, Nicholas


Waldegrave, Hon William
Wolfson, Mark


Walden, George
Wood, Timothy


Walker, Cecil (Belfast N)
Woodcock, Michael


Walker, Bill (T'side N)
Yeo, Tim


Walker, Rt Hon P. (W'cester)
Young, Sir George (Acton)


Waller, Gary
Younger, Rt Hon George


Walters, Dennis



Wardle, C. (Bexhill)
Tellers for the Noes:


Warren, Kenneth
Mr. Robert Boscawen and


Watson, John
Mr. Donald Thompson.


Watts, John

Question accordingly negatived.

It being after Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.

Orders of the Day — Hyndburn (Housing)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Major.]

Mr. Ken Hargreaves: In bringing to the attention of the House the housing problem in Hyndburn, I begin by acknowledging with gratitude the interest in and concern for these problems which the Government have shown while I have represented that constituency. Last year's housing investment programme allocation for Hyndburn was increased by 16 per cent. while other authorities had theirs reduced. The Minister for Housing and Construction visited Accrington and Oswaldtwistle in April and was most impressed with what he saw, especially the quadrangle scheme in the centre of Oswaldtwistle. On Thursday, we met the Minister to discuss our problems. No one can, therefore, accuse the Government of not being interested in our problems.
Last year's increase in HIP was welcome. We have had an increase of 54 per cent. during the past five years. Although 54 per cent. seems impressive, it is largely because we started from a low base. Nevertheless, we were grateful. I do not wish to give the impression that we are always moaning; rather I wish to set out the real worries of the council and its conscientious members. It has identified the problems and devised policies to solve them but is frustrated in so doing by a lack of resources. Not to draw the Government's attention to the position and its financial implications would be irresponsible.
I realise that the Government have made it a cornerstone of their policy to ensure that public expenditure does not consume too great a proportion of the nation's wealth. I support them in that, just as I support their policy to extend owner-occupation. Because I support it, I am asking for money to be spent now. It will give real value for money. The spending of relatively small amounts now will prevent the need to spend much larger sums at a later date.
We either improve our present substandard houses and thereby keep them in the private sector, or we allow them to deteriorate still further so that eventually they must be demolished and replaced by council houses at five times

the cost. It does not seem to make sense, on the one hand to pursue a policy of widening owner-occupation by selling council houses to tenants—Hyndburn borough council did it long before it was compulsory to do so—while, on the other hand, allowing existing owner-occupied properties to fall into disrepair, be demolished and replaced by council houses. That would not be in line with Government policy.
I ask the Minister to consider the case of an old lady who lives in one of Hyndburn's typical old terraced houses with no inside toilet or bath, which is in serious disrepair. There are thousands of such houses in Hyndburn. Consider also the implications for public spending of dealing with her problem. The council can improve her home through a grant at a cost to public funds of some £4,000. Alternatively, it can allow the house to deteriorate, eventually demolish it and rehouse her in a new council house at a cost of £20,000. The implications for public spending do not end there.
The old lady, now happily rehoused, will find that the rent on her new house is the average Hyndburn rent of £16 a week, which she cannot afford. She will therefore qualify for the average Hyndburn rebate of £11 for the next 20 years of her life. Whereas an improvement grant would have left her free from support from public funds, such funds now have to find £11,400 for 20 years—a total of £31,400. In other words it will cost almost £32,000 to rehouse an old lady in an area to which she does not want to go. For one eighth of that sum she could have remained in familiar surroundings.
What, then, can be done? Bearing in mind the Government's economic and housing policies, it seems necessary to find a way in which to concentrate spending on the small number of authorities with the worst pre-1919 owner-occupied houses — what we may designate as housing stress areas. The concept of such areas has no formal history as it has been invented by officers of Hyndburn borough council. It does, however, have obvious antecedents in inner urban area designation.
The main thrust of the Government's housing policy has been to promote owner-occupation by extending its availability to people in lower income groups. There are, however, a small number of areas in the country where high levels of owner-occupation have already been achieved due to the self-reliance and independence of the inhabitants and the way in which they have resisted the onslaught of municipal Socialism in housing. They take pride in owning their own home, and therefore in these areas the problem is not to promote owner-occupation, but to retain it. While the Government have concentrated on providing effective policies to promote new owner-occupation, they have, perhaps, understandably, not paid sufficient attention to the problems of boroughs such as Hyndburn with its 80 per cent. owner-occupied properties of which 40 per cent. are substandard and in need of major renovation. Policies such as the sale of council houses, low-cost home ownership schemes and the removal of restraints on private builders, important though they are in the national context, are of only minor relevance in Hyndburn where there are few council houses to sell. The availability of capital receipts from council house sales has been a major source of investment resource in many authorities with large numbers of high-priced council houses for sale. This, however, has not been Hyndburn's case. According to the generalised needs index, Hyndburn has 0·255 per cent. of the country's housing need, yet its


capital receipts as a percentage of the national figure are only one-tenth of that amount. Despite having the largest percentage of physically substandard properties in the country according to a recent Shelter survey, Hyndburn's HIP allocation, plus usable capital receipts was some 5 per cent. below the national per capita average—largely due to the very low potential for raising capital receipts. This clearly makes it more difficult for Hyndburn to tackle its housing problems.
I am not suggesting that the Government have not helped owner-occupiers — they have — with improvements in the grant system, and through sizeable increases in the amount of money for renovation grants in 1983–84 as opposed to 1978–79. Last year, local authorities were allowed to spend as much as they wished on renovation grants. Some authorities, of which Hyndburn was one, were not able to take full advantage of this because of the revenue costs of such spending and the effect it would have on rate support grant penalties. The increases in Hyndburn's housing expenditure since 1978–79 have added 5·4 per cent. to Hyndburn's total rate-borne expenditure, which means that Hyndburn would have had to make far greater cuts than other councils in other areas of expenditure if it was to reduce its expenditure to target levels.
A further reason for the difficulties which Hyndburn and similar areas face is the GREA system itself, where indicators used to measure the need for revenue expenditure are biased towards the needs that are most associated with private renting and multi-occupation. Under the definition used in the 1981 census, sharing occurs only when there is no common living or sitting room and no common meals. Such sharing is rare in Hyndburn. Most people in shared accommodation in the borough live with relatives and share housekeeping. The 1981 census shows only 115 households in the borough living in shared accommodation. However, at the time of the census, there were 350 applications on the housing waiting list describing themselves as living in shared accommodation, usually with relations, from which they wished to be rehoused.
Hyndburn would argue that on this basis its housing needs are heavily underscored. For example, a single parent with a child living with one set of parents, and perhaps her brother or sister, in a two-bedroomed owner-occupied terrace house would not score any GREA points unless the accommodation lacked a basic amenity. However, if the same size house were split into four bed-sitting rooms with a shared bathroom and inside toilet, with a single parent living in one room and a single person in each of the others, those people, with the same physical housing conditions, would add three times as much to the authority's GREA as the people in the previous situation.
The result of this is that despite having the very high need for spending in the private sector, to which I have already referred, Hyndburn has a GREA for revenue spending on private sector housing which is only 1·5 per cent. above the national per capita average. The GREA is only about one-third of what the authority actually spends on trying to retain owner-occupation.
The Government are reviewing the grant system and are concerned to ensure that grants go only to houses that would not otherwise have been renovated. This is already occurring in Hyndburn. Resources are having to be concentrated on the areas of greatest need, which is why I suggested that the Government should similarly

concentrate their resources by declaring housing stress areas into which additional capital and revenue resources could be invested to help areas with the highest levels of owner-occupied properties that were substandard and in need of repair. Such designation would be wholly justified. Individuals who have invested into their homes their resources, which are limited because we are a low-wage area, need to be protected. They need grants to be made available to ensure that the inability of others living in the same terrace to afford to repair their properties unaided does not threaten the future viability of the whole row.
Government action is needed to prove to these people that there is a long-term future for low-income owner-occupation. Unless some way is found to provide additional help in Hyndburn it will be 30 years before all our owner-occupied households can enjoy basic amenities in properties free from major defects. Even on the unreasonable assumption that there will be no deterioration in the meantime and no improvements above basic standards, the average terraced properties, many still with Tippler toilets at the bottom of the yard, will have reached their 130th year before being brought up to adequate standards.
I believe that the thrifty, hard-working people of Hyndburn deserve better than that, and I urge the Government to accept my suggestions or to find other ways of helping Hyndburn and areas similar to it where help is not only needed but is appreciated and where resources are used wisely.

The Parliamentary Under-Secretary of State for the Environment (Sir George Young): The House is very grateful to my hon. Friend the Member for Hyndburn (Mr. Hargreaves) for the way that he has developed the case for more resources for his constituents living in Hyndburn. He brought a deputation to my Department last Thursday, and I was extremely impressed by the responsible and well argued approach adopted by the councillors and officials whom I met and by the way that the case had been prepared in some documents which I found compelling reading.
What came through my meeting with my hon . Friend was the genuine concern of the councillors and the local Member for the housing problems that we still have to tackle in Hyndburn and the determination to tackle them without simply whining and demanding a share of increasing public resources which simply are not available.
The case that my hon. Friend has just put to the House was again very well argued. I was impressed by the cost-benefit analysis which he put forward, basically arguing that money spent on improvement grants now will ensure that it is not necessary to demolish buildings in a few years' time with all the financial cost and social disruption that would accompany wholesale demolition.
My hon. Friend also made the point that the Government's commitment to owner-occupation made it a safety net for those low income households who are owner-occupiers who may not be able to afford the substantial repairs that are necessary from time to time without the help of improvement grants.
My hon. Friend has been diligent. As I said, he led a deputation to my Department last week. He has initiated this debate this evening and I understand that he is seeing another Minister in my Department later this week to


develop the case for local government finance and the resources that go to Hyndburn through the rate support grant.
One has to address oneself to the particular issues facing Hyndburn. It came through at the meeting that the position there is unusual mainly because of the high proportion of owner-occupiers. I assure my hon. Friend that his concern is understood and shared by the Government, and I want to show how our policies are helping him and his colleagues in Hyndburn to tackle the issues that he has mentioned.
Although I have not visited Hyndburn, my hon. Friend the Minister for Housing and Construction did so at my hon. Friend's invitation in April, and I know from talking to him that that visit made a deep impression on him.
The sheer scale of the problems — in particular the long terraces of stone built houses with sagging walls and roofs, now at the end of their lives unless quick action is taken—was one part of the impression the visit made. Another was the ways in which action can be and is being taken.
My hon. Friend was particularly encouraged by the successful involvement of housing associations in rehabilitation of older housing which he saw at the Bradford and Northern Housing Association scheme at the Quadrangle, Oswaldtwistle, and with the efforts made and the continuing potential for private sector area improvement.
The north-east Lancashire towns have certain housing characteristics which mark them out from most other parts of the country. One of these, which I touched on a moment ago, is the traditionally high rate of home ownership. This is not surprising as the area was one of the cradles of the building society movement.
In Hyndburn's case there are some 27,000 privately owned dwellings — 84 per cent. of the total stock—which is way above the national average at 60 to 63 per cent. Equally characteristic is the large proportion of terraced houses, built before 1919.
In Accrington, many houses were built with stone facing, but rubble filled walls, a particular cause of instability and an expensive problem, where instability occurs, to put right.
The ready availability of older terraced housing has acted as a disincentive to new house building. When a terraced house can be bought improved for no more than £7,000 or unimproved for as little as £3,000 or less, the market for new houses at £16,000 is severely inhibited. My hon. Friend the Minister learned that at first hand from a developer who had been vigorously marketing two sites in the borough but where sales have been disappointing. "Low cost homes", in such an area, has a different meaning from the usual one. For someone like myself as a London Member used to London prices, the sort of figures that I have just been quoting seem remarkable.
The combination of a high percentage of owner-occupiers coupled with low house prices mark out Hyndburn as being somewhat unusual compared with other parts of the country.
The low house prices also have an effect on the value for money of carrying out housing improvement. It is far harder to make the economies of improvement stack up when the value added may be less than half the cost of doing the work.
Another problem for Hyndburn, which my hon. Friend the Member for Hyndburn and his councillors described on Thursday and which the Government fully recognise, is that the ability to generate capital receipts is limited. Hyndburn's stock of council houses was small to start with and I am aware that sales under the right to buy have not so far been as high as in other parts of the country.
I know that one of the issues that concerns the local authority is the absence of any adequate national arrangements which would take into account the ability of individual local authorities to finance investment from capital receipts. It is, however, the case that some account is taken of this fact. The reduction this year in the prescribed proportion of capital receipts which individual authorities could spend from 50 per cent. to 40 per cent. increased the amount of those receipts which were available for allocation centrally by my Department. This specific step was taken so that areas such as Hyndburn could benefit. I shall be returning to allocation later on.
I very much hope that the Housing and Building Control Act 1984 will help to stimulate home ownership through the right to buy and, in particular, that it will enable less well off people to get started in becoming owners of their homes. The Act has introduced increased discounts so that secure tenants of 30 years' standing now qualify for a 60 per cent. rather than 50 per cent. reduction; secure tenants now qualify to claim the right to buy after only two years instead of three years' tenancy; and there is an entitlement to buy on an equity sharing basis. Tenants of leasehold property have also had the right to buy extended to them—a significant fact in a number of parts of the north-west.
Our object in that legislation has been to bring home ownership within the reach of the largest number of people possible. We have also tried to ensure that tenants are aware of their statutory rights by a large scale distribution of literature direct to tenants' homes to advise them how they can go about exercising the right to buy.
On capital resources, my hon. Friend recognised that the overriding factor must be the amount that can be made available for housing nationally. The Government have repeatedly made it clear that they are determined that public expenditure should not consume too great a proportion of the nation's wealth, and public sector housing has had to make its contribution.
Looking at longer-term prospects that emerge from that strategy, the lower rate of inflation which Government policies have achieved should lead to a more stable housing environment, and one in which investment decisions can be made against a more secure background. Housing has of course in the past contributed to reductions in public expenditure. However, the HIP total for 1984–85 was increased by more than £50 million compared with the 1983–84 figure.
The borough council of Hyndburn received an allocation for 1984–85 of £3·675 million, which was an increase in cash terms of 16·1 per cent. on the 1983–4 allocation. That was a substantial increase—one of the largest in the north-west.
That allocation recognised the particular spending needs of the borough, not least the need for private sector improvement, which formed a large part of my hon. Friend's speech. Allocations are determined partly on the basis of the generalised needs index and partly at the discretion of the Department's regional office. The GNI is the best objective assessment of need that we have. It


is kept under regular review and is agreed annually with the local authority associations. Even so, it is not perfect and, in order to compensate for factors which are not easily measured or are peculiar to particular areas, regional offices may distribute a proportion of resources, 50 per cent. in 1984–5, according to their perception of need. In addition, authorities may add capital receipts to their allocation.
However, this year my right hon. Friend the Secretary of State had to ask authorities to restrain their capital spending in 1984–85 and, in particular, not to use receipts accumulated in previous years. Returns made by authorities had shown that, unless action was taken, a substantial overspending on the local authority capital expenditure cash limit would have been likely. That would have been in addition to the actual overspending in 1983–4.
Most authorities have complied with the request. Hyndburn, I understand, is one of them; and I should like the council to know how grateful we are for its cooperation. I know the difficult decisions that it has had to take in order to limit its spending.
In September, authorities were asked to continue to exercise restraint. This is not a moratorium; we do not believe that a moratorium would be justified in terms of the extra savings that it might produce. We shall keep the position under review in the light of authorities' expenditure returns.
My hon. Friend was worried that there might be a bias built into our allocation process in favour of districts that have inner urban area status. An inner area weighting is applied to the GNI scores and authorities that have this status. That is because the areas selected have particular concentrations of need, in housing as well as in other terms, which marks them out from other authorities. Of course, many authorities have problems in particular areas—sometimes even over quite large areas—which would match those of inner urban authorities. But it is the scale and the intensity of the problems in the latter case, as measured by the most objective means that we have, which has led to their selection for special help.
It has been a fundamental part of inner urban area policy that special help should not merely be available through the urban programme, but also through main programmes, including the housing investment programme. I assure my hon. Friend that the particular problems of his authority will continue to be taken into consideration when allocations are made. Looking at the figures for the current year, I see that Hyndburn has had a very substantial allocation under the traditional urban programme.
My hon. Friend referred to the difficulties facing the elderly. Hyndburn, in common with other areas in the north-west, has a relatively large number of elderly people and there is, therefore, a need for some degree of support to enable old people to lead as independent lives as they can for as long as possible. This may take the form of sheltered accommodation. Hyndburn's new housebuilding proposals for 1985–86 relate entirely to provision for the elderly. However, I would commend the research report by Dr. Anthea Tinker in my Department entitled "Staying at Home: Helping Elderly People". We sent copies to all

housing authorities as well as social services and health authorities on 16 October. The report examines in detail alternatives to sheltered housing or institutional care which enable the more dependent elderly to remain in their own homes. The evidence is that that is what most old people wish to do. Alarm and care schemes are often cheaper than sheltered housing. En addition to the alarm systems there must be adequate support services. The support of families and neighbours is thus extremely important. In Lancashire there is a tradition of neighbourliness and community support which has a crucial part to play in the care of the growing number of very elderly people. I hope that the council will look carefully at Dr. Tinker's report from the point of view both of the best interest of older residents and of making the best use of finite resources.
The renovation of privately-owned dwellings is particularly relevant to Hyndburn as some 84 per cent of its stock is privately owned. The higher grant rates and the inducement of additional allocations available under the indicative figure system were intended not only as a measure to help the building industry but also to encourage improvements in the private sector stock.
My hon. Friend mentioned improvement grants, and I was interested to hear what he said about Hyndburn's policy of trying to concentrate improvement grant resources on those who most needed them. He urged the Government to do likewise. A consultation paper on proposed changes is expected to be published shortly. A simplification of the system is certainly one of our main objectives, but another objective, which my hon. Friend touched on, is the securing of better value for money. I share the view that it is important to seek ways of targeting the resources towards the people and properties which most need them. I am sure that my hon. Friend and his local authority will find the proposals that we have to make of considerable interest. No doubt the authority will wish to ensure that the proposals that my hon. Friend has outlined for housing stress areas to be designated are included in its response to the consultation.
During the past two years, Hyndburn has been able to spend a considerable amount compared to previous years on improvements in the private sector—£1·6 million in 1982–83 and £1·8 million in 1983–84 when the borough council benefited from an additional retrospective allocation of nearly £250,000 under the indicative figure arrangements. The council has expressed concern about the revenue consequences of capital spending, not least in area improvement activity, which is staff intensive. That is something that my hon. Friend may wish to develop when he sees my colleague later this year.
I am grateful to my hon. Friend for the very positive and constructive way in which he has approached the housing problems of his constituents. They have good cause to thank him for putting their interests so clearly before us. When we make the allocations for Hyndburn later this year, we shall of course take his remarks fully into account and do what we can to tackle the problems that he has mentioned. We share with him a determination to make further progress.

Question put and agreed to.

Adjourned accordingly at, sixteen minutes to Eleven o'clock.